Scottish Mortgage takes £2.57bn hit in first half

Baillie Gifford HQ in Edinburgh

Scottish Mortgage Investment Trust, Baillie Gifford’s flagship fund, on Friday reported its net asset value per share (NAV) fell almost 18%, with borrowings at book value, for the six months to September 30, 2022.

The company reported a loss of £2.57 billion on “net return on ordinary activities before taxation” compared to a profit of £2.67 billion a year prior.

Nonetheless, Scottish Mortgage increased its interim dividend by 5.2% to 1.60p per share from 1.52p a year ago.

Scottish Mortgage said its NAV per share at September 30 fell almost 18% to £8.42 from £10.22 at March 31, with with borrowings at book value.

The NAV per share was 39% lower year-on-year, down from £13.81.

The giant closed-end fund reported a swing to a negative NAV total return of 17%, compared to positive 16% a year ago.

Scottish Mortgage’s share price is down about 46% for the past 12 months.

Looking ahead, the company noted increasing friction between the US and China amid rising interest rates which both create a “problematic environment to navigate.”

The firm noted that it had reduced several Chinese holdings, such as long-standing investments in Alibaba Group Holding Ltd and Tencent Holdings Ltd due to the regulatory environment in the country.

Scottish Mortgage said that Moderna Inc remains its largest holding, which continues to progress its infectious disease portfolio, including a bivalent booster for Covid.

At investee Tesla Inc, the company noted sales are strong. However, it said battery cells supply chain issues remain the most significant constraint.

The investment trust said it invested further into Swedish battery developer Northvolt AB, which is now one of its largest positions. It sees Northvolt on track to supply a rapidly growing electric vehicles market.