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Scotch on the rocks

The travails of the Scottish Mortgage investment trust and indeed Baillie Gifford as a whole during 2022 are well documented, with the investment trust's shares now 44 per cent lower than they were a year ago. 

A particular problem for the trust right now is its exposure to Tesla, which is its third largest holding. 

The trust's lead manager, Tom Slater, has long made a virtue of his deep connections in Silicon Valley and the quality of his personal relationship with Elon Musk, but given Tesla's share price decline of 71 per cent over the past year, the conversations between the two might be slightly more complicated now than in the past.

James Anderson will probably be feeling fairly satisfied about the timing of his retirement.

There are those who believe Tesla was wildly overvalued, and there are those who believe Musk's antics since buying Twitter have fundamentally undermined his management of the car company.

Our database shows the allocators we cover are not waiting around to find out, with just one DFM continuing to own Scottish Mortgage, following a string of sales in recent years - including a couple in the past few months.

The discount is currently 10 per cent, but a challenge for potential bargain hunters is understanding what the net asset value might be for a trust that invests in unquoted companies in current market conditions. 

Very few Baillie Gifford funds are now held by more than two of the allocators we cover and several of them have faced sales - including bond funds.

Baillie Gifford High Yield Bond, for example, was held by five DFMs at the start of 2022 but is now held by just one.

The only outlier is Baillie Gifford Japanese which is held by seven DFMs has has held up pretty well as the most popular Japan equity fund.

But many Baillie Gifford funds own Musk companies (something a Japan equity fund is obviously shielded from) and, fairly or not, the Edinburgh firm has become closely associated with the billionaire in the minds of many.

Though to be fair, of the 10 sterling denominated funds with the largest Tesla holdings, five are Baillie Gifford vehicles.

For example one of these is Baillie Gifford American, of which Tesla is the third largest holding and which has been sold by several of the DFMs we cover this year.

Until we find out whether Tesla is simply reverting to a sensible valuation or Musk is tarnished, it may be one of the things weighing on investor sentiment as far as Baillie Gifford is concerned.

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