Ahead of the Six Nations rugby starting this weekend, new data from social investing network eToro shows that the strongest XV Scotland-headquartered stocks have easily outperformed the wider FTSE 350 over a 10 year period.
The report said the Scotland-headquartered listed firms have generated almost double the returns of FTSE 350 over 10 years, but “remain underrepresented.”
The report said: “Since January 2013, a basket of the 15 biggest Scotland-headquartered firms (simple weighting) listed in the FTSE 350 have returned investors 56.1% versus just 30.5% for the FTSE350 Index as a whole.
“This outperformance is also there over the last three years – with the basket of Scottish stocks beating FTSE350 returns by 11.9%.
“However the picture starts to change as we near the present day, with the Scottish companies underperforming vs the FTSE 350 by 4.6% (over one year).
eToro said one key driver of this trend is that 10 of the 15 Scottish-headquartered companies are in the financial services sector — including big names such as Scottish Mortgage, NatWest, Abrdn, Virgin Money and Alliance Trust — all of which have been impacted in some way by the market downturn which started last year.
The largest listed firm headquartered in Scotland is NatWest, followed by Perth-based utility giant SSE.
However, it was the performance of Baillie Gifford’s giant Scottish Mortgage Investment Trust, and Glasgow energy infrastructure company Smart Metering Systems, respectively up 388% and 239% over 10 years, which have driven the pack.
eToro said other Scottish sectors have not fared as well, with Aberdeen engineering giant Wood Group down 80% in the past decade, while oil exploration firm Ithaca Energy is down 15% since listing late in 2022.
The 15 firms included in the basket were NatWest, SSE, Scottish Mortgage, Abrdn, Virgin Money, Weir Group, Alliance Trust, Wood Group, Smart Metering Systems, The Edinburgh Investment Trust, Aberforth Smaller Companies Trust, Murray International, Templeton Emerging Markets, Personal Assets Trust, and Ithaca Energy.
The report said that in total, Scotland-headquartered firms make up 5% of the total number of large UK listed companies with a market capitalisation of £1 billion or more.
This falls short of Scotland’s circa 8% contribution to UK GDP, the report said.
Ben Laidler, Global Markets Strategist at eToro said: “Scotland fans will be praying for a third consecutive Six Nations win over England next week, and for any investors who have heavily backed Scotland’s largest listed firms over the last decade, they may feel they’ve already won.
“Thanks to the stellar performance of Scotland’s brightest stars in the FTSE 350 – Scottish Mortgage Investment Trust and Smart Metering Systems – the first XV of Scotland’s listed companies have provided a healthy return over a long period.
“However, with Scotland’s firms so heavily focused on the financial sector, a basket of these stocks is heavily influenced by the performance of this sector.”