Scottish Mortgage’s James Anderson and Tom Slater have argued the scale of their gargantuan £18bn trust is a “virtue rather than a hindrance” when it comes to accessing opportunities in private markets.
The trust’s size was a key talking point in an online presentation hosted by Anderson and Slater last week. Last year Scottish Mortgage’s share price surged 110% and assets have swelled to £18bn.
“Our task isn’t primarily about any one year’s performance, or about growth versus value or the like. It is about trying to build our underlying competitive advantage. Scale becomes a virtue, rather than a hindrance. We have the abilities, connections and resources in a much greater way now, to be able to build that competitive advantage.”
Though the trust has rapidly ballooned in size, Slater dismissed suggestions that it would be trickier for Anderson and him to deploy capital and take sizeable stakes in private companies.
“If I’m a private company trying to raise capital, I would rather make a small number of phone calls, than a large number of phone calls,” Slater said. “And if there is a potential investor who can write the whole cheque rather than just contribute to the bill, then that is the phone call I will make first.”
“Now if you think about it, we can have this substantial exposure to private companies which your average manager, and I mean average rather than a good one, would charge you 2 and 20 at least. That would cover the entire fee of Scottish Mortgage.”
Unquoted companies have become a much bigger proportion of Anderson and Slater’s holdings over time, ballooning from 4% in 2015 to 25% at the end of March 2020. That exposure can now go as high as 30% of NAV after shareholders approved changes to its investment policy at the trust’s AGM in June.