This time last year we asked Investors Chronicle readers to vote for their favourite Investment Companies. Top of the list by some margin was Scottish Mortgage Investment Trust (SMT). Launched in 1909, this is the flagship fund of investment management firm Baillie Gifford and has nothing to do with mortgages or Scotland. It's actually a low-cost equity fund that invests for long-term growth on a global basis.
James Anderson is Scottish Mortgage's investment manager. He believes the extraordinary pace of technological change, coupled with the incredible economic change going on in China ,will produce unimaginable profit and unimaginable change. The portfolio bears little resemblance to its benchmark, the FTSE All World index, which is only used for a performance measurement over a five-year rolling period. Scottish Mortgage has high exposure to North American and European equities, which could make it a good diversifier if your portfolio is over-reliant on UK equities.
Here's what Investors Chronicle readers said about Scottish Mortgage:
"I agree with its investment themes of technological advance and the rise of China. I also like its long term and unconstrained philosophy."
"Its approach is fundamentally optimistic, looking for potentially unlimited upside from its investments, which is a good diversification to my own more pessimistic approach."
"It gives concise, regular reports on its aims, objectives and results to date, written in an easily understood manner."
"It has a low expense ratio but has delivered excellent performance over the years."
Scottish Mortgage Top 10 holdings (as at 30 September 2014)
| Holding | % |
|---|---|
| Baidu.com ADR | 8.3 |
| Amazon.com | 7.1 |
| Illumina | 7.0 |
| Tencent | 5.8 |
| Inditex | 4.6 |
| Alibaba Group Holding | 4.5 |
| 3.2 | |
| Kering | 2.6 |
| Banco Santander | 2.6 |
| Atlas Copco A | 2.6 |
Source: Baillie Gifford
Below is a selection of reader comments about other investment trusts that ranked highly with Investors Chronicle readers.
City of London (CTY)
AIC sector: UK Equity Income
"This trust is a valuable core holding in my portfolio. It invests in some great British companies and has delivered solid consistent performance."
"I did some research on the fund manager (Job Curtis) and liked his background (he is PPE from Oxbridge) and was someone I felt I could trust on fiduciary/probity grounds and then importantly, had confidence in the economic clout he would bring to my money."
RIT Capital Partners (RCP)
AIC sector: Global
"It is a 'sleep at night' core holding with the financial muscle to access any investments the managers identify. Lord Rothschild has proved a shrewd investor over many years and I'm sure will plan succession to ensure his family wealth is preserved."
"It holds stakes in unquoted investments which as an individual I could not access."
"This is near as you can get to a 'buy and forget' investment, a veritable all-in-one personal portfolio."
Caledonia Investments (CLDN)
AIC sector: Global
"The turnaround story of Caledonia has been fantastic. The family still own a massive part of the shares but Caledonia have now sold assets to focus more on income producing assets."
Templeton Emerging Markets (TEM)
AIC sector: Global Emerging Markets
"It is a leader in seeking global value, was a major catalyst in the broadening of investment managers' horizons and thinking, on sources and targets for investing. It has over time remained true to its ethos, and has acted to inspire rigorous, disciplined and more open approaches to investment consideration."
Aberdeen Asian Smaller Companies (AAS)
AIC sector: Asia Pacific -Excluding Japan
"The trust manager's communication with investors is outstanding. I find the comprehensive updates I receive from them - explaining what's gone right, what's gone wrong, their expectations for the future and the rational for their investment decisions - interesting and educational."
Biotech Growth Trust (BIOG)
AIC sector: Sector Specialist: Biotechnology/Life Sciences
"It has an excellent track record and operates in a field which is likely to see significant expansion globally over the coming years."
Personal Assets Trust (PNL)
AIC sector: Global
"Robin Angus's quarterly shareholder letter is always an entertaining read - and in many ways better than Warren Buffett's shareholder letter."
Foreign & Colonial Investment Trust (FRCL)
AIC sector: Global
"Like a doting grandparent she has paid for holidays, treats, emergencies and even the occasional school fee. Yet (with dividends reinvested) she never complains, constantly renews and repairs herself and always seems to be ready when I sidle up with my latest demand."
Murray International (MYI)
AIC sector: Global Equity Income
"The manager has a very sober and sound appraisal of the present economic climate."
INVESTORS CHRONICLE READERS' FAVOURITE INVESTMENT TRUSTS
| Favourite investment trust | Number of votes |
|---|---|
| Scottish Mortgage | 14 |
| City of London | 7 |
| RIT Capital Partners | 6 |
| Caledonia Investments | 5 |
| Templeton Emerging Markets | 5 |
| Aberdeen Asian Smaller Companies | 4 |
| Biotech Growth Trust | 4 |
| Personal Assets Trust | 4 |
| Alliance Trust | 3 |
| F&C Global Smaller Companies | 3 |
| Finsbury Growth & Income | 3 |
| Foreign & Colonial | 3 |
| Henderson Smaller Companies | 3 |
| HICL Infrastructure | 3 |
| Law Debenture | 3 |
| Murray International | 3 |
| Ruffer Investment Company | 3 |
| Witan | 3 |
Source: Investors Chronicle, based on 164 readers voting in October and November 2013.
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