Over the past two decades, I think it is fair to say UK investors have missed out on the global tech boom.
While the UK is home to many hundreds of up-and-coming tech businesses, particularly fintech businesses which are revolutionising the financial services sector, the actual number of investment opportunities for investors like you and me are slim. Most of the world’s largest tech companies are listed in the United States and China’s largest technology businesses are listed in, well, China.
This means it’s difficult (but not impossible) for UK investors to build a portfolio of leading technology businesses. The Scottish Mortage Investment trust (LSE: SMT) solves this problem.
Over the past decade, it’s established itself as one of the UK’s leading investment trusts by investing in some of the world’s fastest growing technology businesses.
World leaders Managed by James Anderson since the beginning of 2000, SMT was one of the first UK investment companies to take advantage of the opportunity presented by Amazon.com (NASDAQ:AMZN). It’s also one of the easiest ways for UK investors to invest in Chinese internet giants Alibaba (NYSE:BABA) Group and Tencent Holdings. Together, these two positions account for around 13% of the trust assets under management. It has 9% of assets under management invested in Amazon.com.
Other top tech holdings include the electric carmaker Tesla (NASDAQ:TSLA), video streaming service Netflix (NASDAQ:NFLX) and Ant International, the wholly-owned offshore subsidiary of Ant Financial, China’s largest online payments processor.
As well as these established companies, Anderson also recently invested $20m in the heavily overscribed float of ride sharing platform Lyft (NASDAQ:LYFT), and I expect the trust will try and get in on Uber’s listing when the firm goes public later this year.
Long term focus Anderson’s approach has attracted some criticism in the past because many of the companies he has, and remains, invested in, have been loss-making.
However, his track record shows clearly that this strategy has paid off over the long term. Over the past five years, the Scottish Mortgage Investment Trust has returned 180%.
So, while some investors might baulk at the trust’s ownership of controversial businesses such as Netflix and Tesla, as well as its acquisition of shares in Lyft, a firm that is losing billions of dollars every year, we should keep in mind that only a few years ago Amazon was in a similar position. The company lost a total of $241m in 2014 on revenues of $89bn and it’s only in the past few years that the group has unleashed its true potential.
The bottom line So overall, if you are looking for an easy way to invest in some of the world’s fastest growing technology companies, then I highly recommend buying the Scottish Mortage Investment trust today.
The fund only charges an annual fee of 0.37%, which is relatively insignificant compared to its long-term returns and much lower than the fees charged by any of the funds which, in my opinion, only adds to its appeal.
Rupert Hargreaves owns no share mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, and Tesla. 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.
Motley Fool UK 2019