Proactive Investors - Scottish Mortgage Investment Trust PLC (LON:SMT)'s departing chair has strongly defended its record and policy of investing in unlisted businesses even though its net asset value (NAV) slumped by almost 20% in 2022.
Fiona McBain, who leaves after the group's AGM following a row with non-executive director Amar Bhidé over investment strategy, said the board firmly believed in the “fundamentals of our investment portfolio”.
Even so, McBain conceded SMT’s performance in recent years had been ”a disappointment” but that it would be wrong to allow short-term volatility to affect long-term investment decisions.
Up until only recently, SMT was famously successful in backing US tech, especially Tesla, and most of its big holdings remain either tech or pharma related.
Covid vaccine pioneer Moderna (NASDAQ:MRNA) is its largest holding currently, followed by European semiconductor maker ASML, Tesla, and Latin American eCommerce site MercadoLibre (NASDAQ:MELI).
Exposure to private investment was 28.6% of the portfolio on 31 March 2023, near the top of the 30% cap agreed by shareholders in 2020.
“Five companies make up nearly half of the company's overall exposure to private firms, and they have generally performed better than their publicly listed peers, raising money at higher valuations than last year, despite the market turmoil,” said McBain.
Valuations, a thorny issue with unlisted businesses, are handled independently of the fund management team, she said, with the market affected by the lack of IPO opportunities.
Overall, NAV fell by 17.8% to 816.8p at the close of the year to March 2023 (2022: 1,021.8p) after a loss of £2.92bn following a £2.79bn drop in the value of its investments.
Shares yesterday were trading at 621p, a 24% discount to the latest asset value.