The rapid rise of SpaceX has dominated talk of Scottish Mortgage Investment Trust (LSE: SMT) shares of late. And it’s not hard to see why. The company spearheading the newish ‘space industry’ is set for a blockbuster $2trn IPO by 1 July (based on the latest rumours). SpaceX has grown to nearly a fifth of the overall portfolio and helped the Scottish Mortgage share price surge 129% since 2023.
But for my money, there’s a lot more to this investment fund than flinging rockets into space, then catching them on their return using chopsticks. The fund has a spectacular track record and could be one of the best buys on the FTSE 100 today. Here’s why.
Good run
Let’s start with that track record. The stock is up about 10 times in value in the last 15 years and about 20 times in the last 25 years. I could compare to popular FTSE 100 or S&P 500 stocks, but I think the numbers speak for themselves.
What’s the reason for the excellent performance? In short, the fund bets big on exciting growth stocks – and has a terrific record of picking more winners than losers. SpaceX is the example that everyone has been focusing on of late. But the fund managers bought Nvidia and Tesla long before those stocks enjoyed their best runs.
Let’s take a look at a few of the fund’s holdings. There are 30 in total from all corners of the globe and in a number of different sectors. I’ve selected five that I think show the breadth and nature of the fund:
- 2.6% – Dutch photolithography producer ASML
- 1.88% – Italian luxury car manufacturer Ferrari
- 1.32% – Chinese electric vehicle manufacturer BYD
- 1.11% – American artificial intelligence and large language model firm Anthropic
- 1.01% – American media and streaming platform Netflix
Is it a buy?
It must be mentioned that there are no guarantees this strategy will work so well in the future. Scottish Mortgage bought many tech companies in an era where tech is dominant. If fears about the artificial intelligence bubble are justified, then we might see a decade or two where technology companies perform below the average.
Another risk to be aware of is that this is outsourcing the stock selection process. While Scottish Mortgage has an excellent track record, that is not a guarantee or the future. And even the better fund managers can go on a losing streak. Some investors may feel more comfortable with a little more control over their own investments.
Overall? I’m bullish on Scottish Mortgage Investment Trust. I also believe there is a pretty good chance the state-of-the-art growth companies it focuses on could dominate in the years to come as they have the year gone by. I think the stock is worth considering.
