Investment Trust Insider on Scottish Mortgage

Investment Trust Insider on Scottish Mortgage – The investment company industry had a good 2017. Money flooded into the sector; we got a couple of new and potentially fast-growing sub-sectors in the form of social housing and biotech debt; discounts narrowed; and, in general, performance was pretty good.

By my reckoning, the average equity-focused investment company beat equivalent indices and, by implication, exchange traded funds (ETFs) in most sectors. The only significant mis-step in performance I can identify was that many Asia, emerging market and US managers were underweight in technology. This was particularly true in the Asia ex-Japan category where quite a few managers were underweight Asia’s technology giants. Stocks such as Tencent and Alibaba doubled, outpacing their US peers.

One fund that did anticipate this trend was Pacific Horizon (PHI). It tops the leader board in the Asia ex-Japan sector for 2017, by some margin, and this is feeding through into improved three- and five-year numbers. Ewan Markson-Brown, who took over the management of the fund in March 2014, could, if the trend continues, end up with a market leading three-year track record. This in turn might let Pacific Horizon close its discount (about 6% at the time of writing) and then expand. As things stand, the fund is sub-scale with a market value of £182 million when compared to its peer group and it is the smallest trust in Baillie Gifford’s stable.

The same conditions that aided Pacific Horizon have also helped ……read more here