I bought 319 Scottish Mortgage shares for my SIPP in January. Here’s how they’ve done
Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
In January this year, I bought 319 Scottish Mortgage (LSE: SMT) shares for my SIPP. At the time, the investment trust was really out of favour, and my view was that, over the medium to long term, it had the potential to outperform.
So, how have these shares performed as we approach the half-way mark of the year? Let’s have a look.
Nice gains
In the first week of January, I snapped up 188 Scottish Mortgage shares at a price of 795p per share. Then in the second week, I added another 131 shares at a price of 761p. In total, the two tranches of shares cost me approximately £2,492 (excluding trading commissions).
Now today, the Scottish Mortgage share price is sitting at 880p. So, those 319 shares are worth about £2,807. That means I’ve generated a 13% return in less than six months. That’s not bad at all. For reference, the FTSE 100 index is up about 6%-7% over that time, so I’ve outperformed that by a wide margin.
I’ll point out that I’m also entitled to a dividend, to be paid on 11 July. However, at 2.64p per share, I’m only going to get around £8 here. So, this isn’t a game-changer.
Attractive outlook
As for my view on the shares today, I’m still bullish.
You see, one of the reasons I bought the 319 shares in January was that I was convinced that a lot of the trust’s holdings would perform well when interest rates were cut. And in most countries – including the US and the UK – the cuts haven’t even started yet.
When they do start to take place, I reckon we will see a surge in the shares prices of a lot of up-and-coming growth companies. This could boost the Scottish Mortgage share price further.
Another reason I’m bullish is that the trust owns some brilliant companies. At the end of May, the top six holdings (representing nearly 40% of its assets) were Nvidia, Moderna, ASML, MercadoLibre, Amazon, and Space Exploration Technologies.
Taking a medium to long-term view, all these companies have the potential to generate gains for investors, in my view (even Nvidia, which is already up 200% over the last year). I’m especially excited about Amazon right now. Currently, its valuation is near historical lows.
I’ve right-sized my position
Of course, I’m prepared for volatility with this investment trust. I don’t expect it to rise in a straight line.
If rate cuts are pushed back further, its share price could experience a wobble. It could also take a hit if one of those six companies I just mentioned experienced a setback.
I’m comfortable with the volatility here though. I’ve sized my position so that my overall portfolio won’t be impacted too badly if it does take a hit.
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Ed Sheldon has positions in ASML, Amazon, Nvidia, and Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended ASML, Amazon, MercadoLibre, and Nvidia. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.