After last year’s record returns, the venerable Edinburgh trust - launched in 1909 - reported a 13.1 per cent fall in its net asset value over the 12 months to the end of March. There was a 9.5 per cent drop in the share price, compared with a 12.8 per cent rise for its benchmark FTSE All-World Index.
The trust’s chairman, Fiona McBain, said: “After the past few years of relatively benign market conditions, it is easy to forget how bumpy the ride can become when storms roll in. Scottish Mortgage has weathered more than most: the Great Depression; two World Wars; the Global Financial Crisis, to name but a few.
“Over time, experience has shown that it is not the ferocity of any market storm that matters, it is what one does during it that will most influence outcomes for shareholders.
“For Scottish Mortgage, our time horizons reach far beyond most others but a sunny long-term forecast is of little value if companies themselves cannot navigate the current storms.
“It has been pleasing, therefore, to note that, whilst many portfolio companies possess the potential to shape the future, they have also continued to deliver strong operational performance and maintained a robust financial position.”
Over a ten-year period to the end of March, the trust has delivered a 633.9 per cent return on its net asset value, against a 231.7 per cent gain for the FTSE All-World Index.
Tom Slater, Baillie Gifford manager of Scottish Mortgage, which has extensive Asian holdings, said the deteriorating geopolitical backdrop and major job losses in the technology and education sectors have made the Chinese government’s “aggressive regulatory stance less tenable”.
He added: “The challenge now for western investors is twofold: incorporating the low but increased chances of future US sanctions into their evaluation of Chinese investments and considering how the Chinese state may limit the upside in stock prices for the breakthrough winners.
“Our Chinese holdings have remained largely unchanged through this period of turbulence.”