If there is one message that has been consistently delivered over the past two decades from the UK’s most popular investment trust (Scottish Mortgage), it’s the need to focus on the long term and to give companies the support they need as they mature. As manager Tom Slater told my colleague Mary McDougall, “when we meet private company entrepreneurs they recognise that we behave as a proper partner for a decade, regardless of whether they are private or public”.
This week joint SMT manager James Anderson, who is stepping down from the fund, expressed to the FT his frustration over the “deep sickness in UK capital markets” that has stifled the growth of homegrown innovative tech stars, something he blames on the UK’s focus on the short term and managers’ fear of getting it wrong if they take a risk.
The evidence that a slow-burn investing approach works lies in the strong performance of SMT in the past 20 years since Anderson first steered it into unlisted waters. Several of these holdings have delivered returns in the thousands of per cents, not just because they were inspired investments but because the trust stayed a loyal partner along the journey for years, even decades afterwards.