US tech crash takes toll on Scottish Mortgage Investment Trust

Scottish Mortgage Investment Trust, one of the most popular funds on the London Stock Market, suffered a double-digit decline in value following a bloodbath in US tech stocks.

The Edinburgh-based firm counts major US tech giants such as Tesla, Amazon and Nvidia among the largest holdings in its portfolio.

Its value boomed during the pandemic, attracting a large following among UK retail investors, which are estimated to make up 75 per cent of its shareholder base.

But stock prices in the sector have plummeted in recent months as fears over inflation, rising interest rates and supply chain disruption dented confidence in tech firms’ ability to maintain growth.

The fears were confirmed by lacklustre results that sent the value of firms including Amazon, Netflix and Facebook owner Meta plunging.

Tesla, in particular, has struggled, down 40 per cent this year. These drops weighed on Scottish Mortgage, which reported the value of its assets had tumbled by 13 per cent in the year to the end of March, massively underperforming its benchmark, the FTSE All-World Index, which logged gains of 12.8 per cent.

It also posted a loss for the year of £2.5billion, swinging from a £9.2billion profit a year ago.

The losses come as star fund manager James Anderson left the company. The decline in value cost the 113-year fund its position as the UK’s largest investment trust, being replaced by 3i Group.

Shares fell yesterday 2.4 per cent, or 18.4p, at 760p as investors were also worried about comments made by management, particularly around China, where the company admitted it had become too invested.

Scottish Mortgage has investments in China e-commerce giant Alibaba and Tencent.

Scottish Mortgage’s lead manager Tom Slater said: ‘Investors in Chinese companies have suffered from president Xi’s regulatory crackdowns in the name of “common prosperity”.’

Nevertheless he also said most firms in the company’s portfolio had delivered ‘exceptional levels of growth over two years’.

Tracy Zhao, at Interactive Investor, said the recent slump in the fund’s share price offered ‘an attractive entry point’ for those willing to go in for the long term.