Scottish Mortgage Investment Trust cuts SpaceX exposure as beats index

Scottish Mortgage Investment Trust PLC on Friday said its returns were nearly double its benchmark index in the half-year to September, thanks to investments that include Elon Musk's SpaceX and AI model maker Anthropic.

However, some of those gains would have been taken back on Thursday, as US technology stock tumbled in a delayed market reaction to the results of the US midterm elections. Shares in Space Exploration Technologies Corp closed down 9.1% to USD123.62, below their initial public offering price of USD135, though they bounced back by 2.5% to USD126.70 in the after-hours session in New York.

In London on Friday morning, Scottish Mortgage shares were up 1.5% to 1,456.00 pence.

The trust is managed by Baillie Gifford & Co, and its investments are focused on growth companies, including many well-known US technology firms.

Scottish Mortgage reported a net asset value total return of 32% for the six months that ended September 30, outperforming the FTSE All-World Index's 16% return, while its share price total return was 34%.

NAV per share rose 31% to 1,726.6 pence at the end of September from 1,315.8p at the end of March, while its share price increased 34% to 1,590.5p from 1,191.0p as the discount to NAV narrowed to 7.9% from 9.5%.

Shareholders' funds grew to £17.69 billion from £13.82 billion. Revenue earnings per share rise 45% to 2.25p from 1.55p, and the trust increases its interim dividend by 13% to 1.80p from 1.60p.

Scottish Mortgage said the strong half-year performance reflected gains across its investment portfolio, including SpaceX and pharmaceutical firm Moderna Inc. The trust also increased its investment in Anthropic, ahead of the AI firm's planned IPO, which prior to the US tech sell-off on Thursday was expected to take place later this month.

Meanwhile, Scottish Mortgage on Friday said it reduced its holding in SpaceX to 11.1% of total assets as of Wednesday this week from 15% on September 30, and its managers took a bit of a victory lap.

"The investment in SpaceX is an important example of what makes Scottish Mortgage distinctive," the company said.

"The managers deserve considerable credit for recognising its potential before it was publicly traded and for sustaining their conviction as the business developed. Equally, the decision to reduce the position following its flotation, while retaining a substantial investment, demonstrates the importance of balancing conviction with disciplined portfolio management."

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