Baillie Gifford's Scottish Mortgage pursues huge share buyback programme ‘with conviction’

Fund manager Tom Slater says trust has a portfolio of “established companies achieving rapid expansion”.

Tom Slater, manager of Scottish Mortgage Investment Trust: 'We intend to pursue this opportunity with conviction.' Picture: Baillie Gifford & Co

Scottish Mortgage Investment Trust has embarked on its biggest ever share buyback programme as it looks to cut its double-digit discount.

The board of directors said they were committed to a significant buyback scheme at the 115-year-old trust, which has been trading at a significant discount since 2022. The trust - the flagship fund of Edinburgh-based investment firm Baillie Gifford - has already bought back £353 million of shares in the past two years, and will ramp up those buybacks to at least £1 billion over the next two years. Share buybacks are often used by companies that believe that their stock is undervalued.

Tom Slater, manager of Scottish Mortgage Investment Trust, said: “In a volatile period for growth investment, we own a portfolio of established companies achieving rapid expansion, propelled by enduring structural trends. Advances in foundational technologies are unlocking exciting new products, services, and business models. These well-funded public and private companies are shaping the future of the economy.

“The stock market has yet to fully recognise their progress, which creates the opportunity for us to buy the portfolio for less than its market value. In doing so, we can provide liquidity and augment returns for our shareholders. We intend to pursue this opportunity with conviction.”

Aidan Moyle, investment analyst at Hargreaves Lansdown, noted: “The trust has been trading at a significant discount since 2022 where they have on average been trading at a discount of just under 10 per cent. Although the trust is currently trading at a double-digit discount, we have conviction in lead manager Tom Slater. He has an excellent long-term track record although the trust has struggled more recently as rising interest rates and inflation moved investors away from a growth style of investing to a focus on a value style of investing.

“Given Slater’s focus on long-term growth companies we believe he could outperform over the long term, though investors should be aware that this trust can be volatile, and its extreme style bias means it can have prolonged periods when it is out of favour with the market. Any investment should be made on a long-term basis.”

Baillie Gifford's Scottish Mortgage looking long term with 'robust' portfolio after first-half dip