I think Scottish Mortgage Investment Trust is a FTSE 100 bargain so I’m buying

This FTSE 100-listed trust is trading at a discount. I’d snap up shares here for big long-term profits, says Tom Rodgers.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Scottish Mortgage Investment Trust (LSE:SMT) is now available at a large discount and in my view is a great buying opportunity. The shares are on offer at a price 2.3% below the net asset value of the companies it holds. 

This FTSE 100 investment trust offers a different prospect to buying individual company shares. Adding SMT to your portfolio means you get exposure to some of the world’s best technology stocks.

These include Amazon, Tesla and Spotify. Also in the mix is Dutch semiconductor giant ASML. It manufacturers computer chips that power millions of devices worldwide for the likes of Intel and Samsung.

It means you can own a slice of the the world’s fastest-growing shares in your Stocks and Shares ISA or SIPP. All this without having to go through the hassle of filling out reams of paperwork dealing with significant additional charges.

Growing in strength

Since I last covered SMT in October 2019, the value of stocks and shares owned by the fund has grown from £7.7bn to £9bn.

Baillie Gifford operates SMT and is one of the world’s biggest asset managers. Joint fund managers James Anderson and Tom Slater don’t just pick big companies and hold them forever. These are no overpaid operators creaming off millions in fees with one eye on the exit. They have proved in recent years that they will drop stocks if they’re underperforming.

Video star

For example, Anderson and Slater sold their holdings of NASDAQ-listed Baidu last year. They assessed the online search giant and saw it being overtaken by WeChat. Digging further, they found that its billionaire chief executive Robin Li turned down a chance to get into short-form video.

This might not sound like much. But Li’s refusal to see the writing on the wall meant the astonishing rise of ByteDance, which owns video sharing app TikTok. If you have children you will probably have heard of this platform.

TikTok is now challenging Facebook for dominance in the video space and according to TechCrunch has over 800 million daily users while its revenue increased 300% in Q4 2019.

Not public but profitable

SMT is able to own a slice of ByteDance even though its shares are not publicly listed on any stock exchange. In fact, 21% of the portfolio is made up of companies whose shares aren’t available to retail investors. And yet there’s no need to miss out. We can still grab a slice of the rapid growth of tech unicorns by investing in SMT.

You’ll pay ongoing charges of 0.37% per year, which in my view is very cheap. Most of all, the investment trust is a low-cost, low-effort entry point for investors who want to diversify worldwide.

While fears about the spread of coronavirus mean the share prices of 87 of the 100 largest UK companies have fallen recently, this market plunge has shone a spotlight on some great opportunities. Follow Warren Buffett’s advice: keep your cool and “be greedy when others are fearful” and I suggest you’ll find significant long-term profits.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Tom Rodgers owns shares in Scottish Mortgage Investment Trust. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

How I’d use an empty Stocks and Shares ISA to aim for a £1,000 monthly passive income

Here's how using a Stocks and Shares ISA really could help those of us who plan to invest for an…

Read more »

Investing Articles

This FTSE stock is up 20% and set for its best day ever! Time to buy?

This Fool takes a look at the half-year results from Burberry (LON:BRBY) to see if the struggling FTSE stock might…

Read more »

Investing Articles

This latest FTSE 100 dip could be an unmissable opportunity to pick up cut-price stocks

The FTSE 100 has pulled back with the government’s policy choices creating some negative sentiment. But this gives us a…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

As the WH Smith share price falls 4% on annual results, is it still worth considering?

WH Smith took a hit after this morning’s results left shareholders unimpressed. With the share price down 4%, Mark Hartley…

Read more »

Investing Articles

The Aviva share price just jumped 4.5% but still yields 7.02%! Time to buy?

A positive set of results has put fresh life into the Aviva share price. Harvey Jones says it offers bags…

Read more »

Investing Articles

Can a €500m buyback kickstart the Vodafone share price?

The Vodafone share price has been a loser for investors in recent years, and the dividend has been cut. We…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Growth Shares

3 mistakes I now avoid when choosing which growth stocks to buy

Jon Smith runs through some of the lessons he's learnt the hard way over the years about what to look…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Should I follow Warren Buffett and sell my favourite shares?

Billionaire US investor Warren Buffett has been selling tons of Apple shares and other stocks of businesses he thinks are…

Read more »