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Scottish Mortgage: why our eyes are wide open to 'unicorns'

by Gavin Lumsden Dec 22, 2016 at 07:00

Earlier this year Tom Slater, co-manager of Scottish Mortgage Trust (SMT), visited Citywire to discuss the growing importance of 'unquoted' stocks in the £4.2 billion global fund.

The record $230 billion (£186.5 billion) flotation in 2014 of China's e-commerce leader Alibaba taught Slator and co-manager James Anderson that nowadays companies can become very large before they list on a public stock exchange and make their shares available to ordinary investors.

Wishing to tap into that growth, the fund managers have allocated nearly 12% of Scottish Mortgage into unlisted companies such as Airbnb, Spotify and Funding Circle, which they could lift to as high as 25% under powers granted to them by shareholders this year.

In this video interview, Slater explains why he and Anderson are looking for the one or two companies that could be the next Alibaba.

However, he adds that the pair have their eyes open to the risks and warns that some of the small stakes in unquoted stocks could turn out to be worthless.

You can read more about Scottish Mortgage's search for 'unicorns' and what it means for the UK's largest equity investment trust in an in-depth interview with Slater in issue 32 of Investment Trust Insider.

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