Scottish Mortgage Investment Trust (LSE: SMT) has performed terribly recently. At 1,446p today, its share price rose 171% from a low of 533p at the end of March 2020. So how are you?
What is an investment trust?
Investment trusts invest in shares of the company as well as other assets such as cash or bonds. The share price of a trust depends on the underlying value of all the assets owned, as well as the demand for a certain number of shares in the trust. One advantage is that the investment is spread across multiple companies, which reduces the time I spend on personal stock research. And a Scottish mortgage can have up to 30% confidence in a private company that is hard to access for retail investors like me.
However, investment trusts charge management fees, annual charges and sometimes performance fees. But the running charge of the Scottish mortgage is 0.34% lower than that of the competitors. And in defense of the lawsuit, the trust has increased its dividends over the past 39 years.
Net asset value
Net asset value (NAV) is the value of a trust per share. This figure is reached by adding the value of all the shares and assets of the trust and then subtracting any ts. This total is then divided by the total number of shares of the trust. Scottish Mortgage currently has a NAV of 1,383p, with a share price of 1,446p. This means that it is trading at a 4.3% premium, indicating high demand.
The Scottish mortgagee said, “We want to add value over a five-year period, especially much more“This long-term investment philosophy is strongly in line with my own investment strategy. But it’s a warning to investors – don’t buy shares if you need money in the short term.
Risk of Scottish mortgage instability
One advantage of most investment trusts is that they are less volatile than individual stocks. But not recently in the case of the Scottish mortgage. It was 1,415p on February 15, before falling to 1,017p on March 5. After recovering, it dropped from 1,277p on 29 April to 1,077p on 12 May. Now reaching 1,446p, I think this pattern could repeat itself. And trust co-manager James Anderson has recently passed away, which is another concern for me.
Its Chinese technology includes stock Alibaba, NIO, And Tencent, Which is risky for all ongoing regulator crackdowns. And it has large holdings Modern And Tesla. Their price-to-earnings (P / E) ratio is skyrocketing, so declining consumer confidence could soon hit these stocks hard.
I think Scottish mortgage technology has given a high return to the upward technology sector. But since I think technical stock is declining soon, I will not add it to my portfolio.
Charles Archer owns Tesla shares. Motley Ful UK owns and recommends shares of Alibaba Group Holdings Limited, NIO Inc. and Tesla. Motley Flower UK is recommended by Modern Inc. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.