Scottish Mortgage Investment Trust (SMT) Fundamentals: Unlisted Growth

Scottish Mortgage Investment Trust (SMT) is the largest investment trust on the London market and one of the few places a UK retail investor can own a slice of SpaceX, ByteDance and Anthropic through an ordinary dealing account. That makes any Scottish Mortgage share price analysis unusual: the organisation does not sell anything, employ engineers or run factories. It is a closed-ended fund, managed by Edinburgh firm Baillie Gifford, whose job is to hold roughly a hundred growth businesses worldwide and let them compound. The numbers that matter are therefore not revenue and operating margin but net asset value, the gap between that value and the share price, borrowing costs and the valuation of a private book that no stock exchange prices daily.

Why a Scottish Mortgage Share Price Analysis Starts With Net Asset Value

A trust has two prices. The first is net asset value per share, or NAV: the estimated worth of everything the portfolio owns, less borrowings, divided by the shares in issue. The second is the market price, set by whoever is buying and selling on the London Stock Exchange that day. Because the share count is fixed rather than created and cancelled on demand, the two can drift apart.

They are apart now. On 3 November 2026 the shares changed hands at roughly 1,500p, or £15.00 each, with the previous close reported at 1,513p. Estimated NAV on the same day was in the region of 1,633p per share, which puts the market price at a discount of about 7.4 per cent. The twelve-month average discount was around 6.2 per cent, and the shares have traded between roughly 1,016p and 1,653p over the past year, so the swing in both the price and the gap has been wide.

Dates and definitions matter here more than usual. The manager's own factsheet at 30 September 2026 recorded NAV at 1,726.85p and the share price at 1,590.50p, a discount of 7.9 per cent. At the 31 March 2026 financial year end, the discount was 9.5 per cent against 9.0 per cent a year earlier. Those figures are measured on different dates and, in the case of the private holdings, sometimes on different valuation bases, so they should be read as separate snapshots rather than a single trend line. A discount does not by itself tell you anything is wrong or right; it tells you the market is pricing the portfolio differently from the valuers, and understanding which of the two is being questioned is the whole exercise.

What the Portfolio Actually Owns

Concentration is the defining feature. On the factsheet dated 30 September 2026, SpaceX alone accounted for 15.0 per cent of total assets. Taiwan Semiconductor Manufacturing Company (TSM) was 6.5 per cent and Nvidia (NVDA) 6.2 per cent, followed by Moderna (MRNA) at 4.3 per cent, ByteDance at 4.0 per cent, Anthropic at 4.0 per cent and drone delivery business Zipline at 3.7 per cent. The thirty largest positions together represented 81.2 per cent of total assets. Amazon (AMZN), MercadoLibre (MELI) and Meta Platforms (META) have featured among the larger listed holdings through 2026, at 3.9 per cent and 3.3 per cent respectively for the first two on the May 2026 factsheet.

Two consequences follow. The first is that a handful of decisions drive the result. A trust where one asset is 15 per cent of the book and the top thirty are four fifths of it is not a diversified global fund in any meaningful sense, whatever the hundred-odd line items suggest. The second is that the exposure is thematically narrow even where it is geographically wide: semiconductors, artificial intelligence infrastructure, space launch, digital commerce and biotechnology, with very little in banks, energy, miners or consumer staples. That is a deliberate choice rather than an accident, and it explains why the trust's returns rarely resemble the FTSE 100.

The Private Company Question

Scottish Mortgage has permission to hold up to 30 per cent of total assets in unlisted companies, measured at the time of investment. In the year to 31 March 2026 shareholders approved a targeted change allowing up to a further £250 million of private company investment above that limit. This is the part of the portfolio that generates most of the debate, because private holdings are valued by a process rather than by a market. Prices are revised when there is a funding round, a comparable listed business re-rates sharply, or the valuers conclude the carrying figure is stale. Between those moments the number sits still while the listed world moves.

June 2026 supplied an unusually clean demonstration. SpaceX, which the trust had carried at 19.3 per cent of total assets at the 31 March 2026 year end, listed on Nasdaq (SPCX). An asset that had been marked by a valuation committee suddenly had a screen price, and its weight in the portfolio subsequently moved with that price rather than with periodic revaluations. Reported terms restricted how much the trust could sell in the early period after listing, and the manager, Tom Slater, has publicly indicated the trust is not obliged to sell a holding simply because it becomes quoted. He has also pointed to Anthropic, Databricks, ByteDance and Stripe as businesses that could plausibly reach public markets in the coming years.

For anyone assessing Scottish Mortgage fundamentals, that sequence is the template to watch. Each private holding that lists converts an estimate into a quote, and the direction of the surprise is not knowable in advance.

What the Year to 31 March 2026 Showed

The trust reports on a half-year and full-year cycle rather than quarterly. For the financial year ended 31 March 2026, NAV total return was 27.4 per cent and share price total return 26.8 per cent, against 18.0 per cent for the FTSE All-World Index, the benchmark the board uses. NAV per share rose 27.4 per cent to 1,282.0p and shareholders' funds increased 14 per cent to £13.8 billion, the smaller rise in the latter reflecting shares bought back and cancelled during the period. Over ten years, the NAV total return stands at 435.2 per cent.

The gap between the NAV return and the share price return is the discount doing its work. When the discount widens over a period, shareholders capture less than the portfolio earns; when it narrows, they capture more. In the year to March 2026 it widened slightly, which is why 27.4 per cent at the asset level became 26.8 per cent in the hands of investors. Note also that the share price total return beat the index by a wide margin in a year when the index itself rose 18.0 per cent, so the comparison says more about relative positioning in growth equities than about any defensive quality.

Costs, Gearing and the Dividend

Charges are genuinely low for actively managed exposure of this kind. The ongoing charges figure was 0.33 per cent for the year to 31 March 2026, up from 0.31 per cent, and there is no performance fee. On a £13.8 billion equity base, that fee level is a function of scale, and it is one of the few things about the trust that is stable from year to year.

Gearing is the trust's structural borrowing, and it magnifies both directions. Gearing stood at approximately 11 per cent of net assets at the 31 March 2026 year end, down from 13 per cent, with the reduction driven by the portfolio growing rather than debt being repaid. The May 2026 factsheet showed net gearing of 8 per cent against gross gearing of 10 per cent, the difference being cash held. Borrowings reported in the region of £0.98 billion in the second half of 2026 are long-dated, which removes refinancing pressure but means the cost is fixed whether or not the portfolio is rising.

The dividend is small and structurally unusual. The total payout for the year to 31 March 2026 rose 4.3 per cent to 4.57p per share, with a final dividend of 2.97p paid on 10 July 2026. Against a share price near 1,500p that is a yield well under half a per cent, and the arithmetic behind it deserves attention: revenue earnings were 2.28p per share, net revenue after tax was £25.6 million, and the total dividend cost about £49.6 million. The payout is therefore roughly twice what the portfolio generated in income, with the balance met from capital reserves. That is permitted for an investment trust and is a conscious policy choice, not a signal of distress, but it does mean the dividend is not funded by dividends received from holdings. Investors treating Scottish Mortgage as an income holding are misreading what it is built to do.

Risks and What Would Change the Picture

Several things could move the analysis materially, and they are worth separating from general market noise.

• Private valuations. A downward revision across the unlisted book, or a funding round completed below the carried value, would cut NAV without any listed holding moving. The reverse applies equally.
• Concentration in one asset. With SpaceX at 15.0 per cent of total assets at 30 September 2026, its quoted price is now a direct and visible input into NAV rather than a periodic estimate.
• The discount itself. Buybacks have been used to address it, and the board has indicated repurchases where the market price sits below NAV. Whether the discount narrows, persists or widens is the difference between the shareholder return and the portfolio return.
• Interest rates and growth equity sentiment. Long-duration growth businesses, particularly loss-making ones, are the most rate-sensitive part of the equity market, and gearing of 8 to 11 per cent amplifies whatever the portfolio does.
• Further listings. Each unlisted holding that reaches public markets replaces an estimate with a price, changing both the valuation basis and the portfolio's reported volatility.

The interim results covering the six months to 30 September 2026 had not been published at the time of writing, so the audited half-year position, including an updated gearing figure and a full revaluation of the private book, is the next substantive disclosure to read.

What to Watch From Here

Scottish Mortgage is best understood as a single, concentrated bet on a particular kind of business, wrapped in a structure that adds two further variables most funds do not have: borrowing and a share price that need not match the assets. A useful Scottish Mortgage share price analysis therefore tracks four things rather than one. How is NAV moving, and how much of that movement comes from quoted prices versus private revaluations? How wide is the discount against its own recent range of roughly 6 to 10 per cent? What is gearing doing to the outcome? And how much of the portfolio now sits in assets with a market price rather than a valuer's estimate?

Those questions have measurable answers that are published monthly in the factsheet and in full twice a year in the interim and annual reports. The concentration, the private book and the gearing are durable features of how this trust is run rather than temporary conditions, so they will be the right lenses next year as well as this one. What they will not do is tell any individual investor whether the holding suits their own circumstances, time horizon or tolerance for a portfolio in which one asset can be a sixth of the whole.

For a London-listed comparison built on the same mechanics, 3i Group (III) is another investment company whose rating rests on net asset value and on how the market treats a dominant unquoted holding, so it is judged on much the same questions of concentration and carrying value.