Investment Trusts  

Scottish Mortgage: Managers should embrace the 'unconventional'

Scottish Mortgage: Managers should embrace the 'unconventional'

Fund managers should be willing to embrace "unreasonable propositions and unreasonable people in order to make extraordinary findings", James Anderson has said in his farewell remarks from the Scottish Mortgage Investment Trust.

In the trust's annual results this morning (May 13) Anderson, who will retire as a partner from Bailie Gifford and stand down as joint manager of Scottish Mortgage at the end of April next year, appealed to fund managers to embrace the unconventional.

He said: “We have to be willing to embrace unreasonable propositions and unreasonable people in order to make extraordinary findings because the notion that utterly reasonable people doing utterly reasonable things will produce massive breakthroughs doesn’t compute to me.

"There is no industry more suspicious of the unconventional than fund management. We need to reinvent from first principles. We need to help create great companies that embrace the extraordinary."

The trust, which has a market cap of £18bn, has thrived over the past decade from its holdings in technology companies, and, over the past year, from its ownership of Tesla in particular. 

Its latest results have seen its strongest ever year for returns, posting a 111 per cent net asset value total return for the year to March 31.

Its share price total return was 348 per cent and 756 per cent respectively over five and ten years.  The share price total return for the year was 99 per cent.

However, revenue earnings per share dropped to 0.62 pence, a reduction from 1.55 pence in 2020 following a decline in income received from portfolio companies.

Despite this, the board said it acknowledged the importance of providing ‘a predictable and growing level of dividend income’ and increased its dividend payment by 5.2 per cent to 3.42 pence. The firm’s revenue earnings for the period will not cover the dividend, so the majority will be paid from realised capital reserves.

The trust has recently added to its management team with the appointment of Lawrence Burns as deputy manager, coinciding with the departure of Anderson.

sally.hickey@ft.com