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Trust’s interim results look good but investors should judge it on its long-term record

Scottish Mortgage Trust (SMT) 482.5p

Gain to date: 0.2%

Original entry price: Buy at 481.4p, 18 October 2018

Impressive half year results on 2 November have helped to put our positive call on leading investment trust Scottish Mortgage (SMT) off to a steady start.

The trust’s net asset value increased by 19% in the six months to 30 September compared with an 11.4% gain for its FTSE All-World Index benchmark.

This period does not encompass the recent stock market correction when Scottish Mortgage was hit thanks to its exposure to growth stocks and, in particular, US technology businesses.

If, as the managers point out, six months is too short a time over which to measure their success then a matter of weeks certainly is.

By sticking to a consistent approach of investing in both public and private firms with the potential to grow substantially on a five or 10-year view the trust has delivered an average annual return for its shareholders of 23% over the last decade.

The latest financial results also demonstrated the advantage of being able to invest in unquoted firms. Since June 2010 when it made its first investment in a private company, these unquoted firms have delivered a total return of 419%.

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