The board of Baillie Gifford’s flagship investment trust, Scottish Mortgage, has recommended a 5% increase in its dividend payments, despite a fairly punishing financial H1.
The trust’s half-year report, spanning the six months to 30 September, stated that its board had recommended an interim dividend of 1.60p per share, compared to last year’s payment of 1.52p.
The decision to boost payments to shareholders comes as the trust suffered a £2.4bn loss on investments in the six months ending 30 September, with a negative net return on ordinary activities of £2.6bn.
The firm has borne the brunt of market headwinds this year, especially given that the same period in 2021 saw it gain £2.7bn. In all, total assets were £14.2bn on 30 September according to its factsheet, having fallen from £16.9bn on 31 March.
Since that date, Scottish Mortgage’s NAV has fallen by 15%, while the FTSE All-World Index has dropped 7% in the same timeframe. In addition, its share price in the year to 11 November was down 37%, hitting £8.18.
The trust’s report did stress, however, that NAV was up 528% over 10 years compared to a 208% return for the index.
Scottish Mortgage also made some alterations to its holdings during the six-month period, reducing the weightings of Alibaba and Tencent, two Chinese companies, due to concerns about the challenging regulatory environment. The report added that the board was worried that “ongoing uncertainty [would] harm the risk-tolerant culture that has driven the long-term success of China’s private sector”.
The trust first invested in Alibaba in 2012, and at the end of March 2022 it constituted 2.5% of the portfolio. However, it now commands a weighting of only 0.9%.
Tencent boasted a 4.2% portfolio weighting on 31 March, the trust’s fifth largest holding at the time. It is now down at 2.8% of total assets, barely making the trust’s top 10 holdings.
Moderna and Tesla are the largest holdings, making up nearly 14% of total assets, and though the former has seen its share price grow by nearly 37% in the last six months, its share of the assets in the trust is down 0.2% in the same period.
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