July 4 is going to be a busy day. Not only is it when the US celebrates its independence but this year it will also be when the UK holds a general election. For investors in Scottish Mortgage Investment Trust, however, July 4 is all about the AGM.
Scottish Mortgage is one of the most popular trusts selected by DIY investors each month. It is also the UK’s largest investment trust, and has been part of the MoneyWeek investment trust portfolio since it launched in 2012.
While the trust has been known for delivering strong returns in the past, its shares plunged 45% at the beginning of 2022 putting it under pressure as it continues to play catch up.
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After a year in which the trust reported a NAV total return of 11.5% in the 12 months to the end of March, but yet failed to beat its benchmark, investors will be especially keen to hear from Scottish Mortgage’s two co-managers as to what is in store for the next 12 months.
Broker interactive investor says: “Tom Slater and Lawrence Burns will have plenty to discuss following a stunning year for the trust’s largest holdings, the semiconductor firms Nvidia and ASML, as well as a much more challenging one for Tesla.
“The meeting, which was arranged before Rishi Sunak called a general election for the same day, is one of the most important in the AGM calendar and provides a rare opportunity to hear directly from and question two of the UK’s most senior investment managers.”
Scottish Mortgage: positive performance
The investor in growth companies globally is managed by Baillie Gifford and has stakes in well-known technology stocks aside from Nvidia and ASML. These include Amazon, Facebook-owner Meta and TikTok-owner ByteDance.
Although Scottish Mortgage failed to beat its benchmark in the year to the end of March, the performance was a marked improvement on the negative returns notched up both in terms of net asset value (NAV) and share price in the previous two years.
Indeed, it has been a roller coaster ride for shareholders of Scottish Mortgage, the £11bn giant of the investment-trust sector. The share price trebled to £15 in the two years to late 2021, then fell by 60% to a low of £6 in the next 18 months. It then climbed back to more than £8 at the end of 2023, before slipping to 750p in January.
Growth stocks and volatile markets
"It has been a challenging yet rewarding year for the company set against a backdrop of volatile markets," said the chair of the trust, Justin Dowley, when the latest annual results were published. "Conflicting forces have been pulling investors in different directions.
"There is a sense of optimism regarding the integration of artificial intelligence into business models. Meanwhile, the macroeconomic and geopolitical factors driving market anxiety are too numerous to mention."
Looking ahead, Scottish Mortgage is "in a strong position to maximise returns for shareholders over the coming years", Dowley added, citing its "strong balance sheet, and high conviction in the current portfolio”.
Investors will be keen to hear more at the AGM in Edinburgh next month.
How to vote at investment trust AGMs
If you own shares in a company or investment trust, it is likely you will be given the opportunity to vote on important matters. This could include electing new members to the board of directors, approving mergers and acquisitions, or agreeing to an executive’s pay package.
Shareholder voting rights are important as they give you the opportunity to hold management to account. However, recent data from interactive investor suggests many shareholders across the industry are failing to make their vote count. The platform revealed 58% of its users never participate at AGMs while 22% rarely do.
Scottish Mortgage invites shareholders to attend its AGM in Edinburgh on 4 July, where they will be given the opportunity to raise any questions and exercise their votes.
Those who do not plan to attend in person can submit proxy voting forms. The deadline for this is 4.30pm on 2 July. Proxy votes can be returned electronically; Scottish Mortgage provides details on how to do this on its website and in its annual report.
If you hold shares in the trust via an investment platform, the process will be slightly different – however the good news is that most major platforms do allow you to exercise your own voting rights.
What’s more, many are taking steps to make this process more straightforward. See our article on shareholder voting rights and why they matter for further details.
At Scottish Mortgage’s upcoming AGM, shareholder resolutions will include the election of new directors, remuneration, and more.
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