Up 10% in a month! Are the Scottish Mortgage shares the best way to play the tech stock recovery?

Scottish Mortgage Investment Trust (LSE: SMT) shares have been highly volatile over the last five years, but have still grown almost 50% in that time.

Like almost every FTSE 100 stock, the investment trust has been caught in the crossfire of Donald Trump’s trade tariffs, which have hit the Magnificent Seven US tech mega-caps hard. Scottish Mortgage has bags of exposure to US tech, with Amazon and Meta Platforms its third and fourth-biggest holdings, respectively, but so far it’s held up pretty well.

Over the past month, the shares have jumped 10.5%, outpacing the S&P 500‘s 12% rise. They’re up a modest 5.7% over one year.

It’s a mistake to see this fund as a substitute for an S&P 500 tracker. While the US accounts for more than half the portfolio, the trust also has plenty of exposure to Asia and Europe. So it has to be judged on its own merits.

Bold bets and timely trims

Scottish Mortgage is no stranger to bold bets. It holds 51 private companies, representing 27.6% of total assets.

This is also a highly concentrated portfolio, with the top 30 holdings representing more than 80% of total assets. One notable position is SpaceX, the largest single holding at 7.8% of total assets. I see it as one of the best ways for UK investors to think about getting exposure to this unlisted venture.

In February, managers Tom Slater and Lawrence Burns significantly reduced Scottish Mortgage’s holding in another Musk enterprise, electric vehicle maker Tesla, which now accounts for less than 1% of the £13.6bn trust.

Slater said the decision was driven by Tesla’s “very strong appreciation”, with the company’s value increasing by half a trillion dollars “without really any fundamental news”. Given subsequent events, this looks like a possibly good call.

This trimming of winners started with Nvidia in November, with Slater and Burns highlighting valuation concerns. While Nvidia remains a “decent size holding”, this now looks like another sound move. It suggests they have a pretty smart handle on tech stocks, making the trust tempting for those who don’t want the risk of buying the Magnificent Seven individually.

Slater remains bullish on SpaceX, as he expects the US will deregulate the space industry. Plus there’s the carrot of a potential IPO, which would be nice.

Discounted entry point

Scottish Mortgage currently trades at a discount of 10.4% to its net asset value. While that looks appealing, I’m always wary of using investment trust premiums and discounts as a gauge. There’s never any guarantee the discount will close. They can always widen.

Today doesn’t offer a brilliant buying opportunity simply because the shares haven’t really been hit that hard by the recent sell-off. In fact, I’m a little surprised by their resilience. Of course, the stock market has recovered strongly, since Trump announced his 90-day tariff pulls on 9 April.

I think today is as good a time to consider buying this FTSE 100 growth trust as any. But only for investors who take a long-term view.

The only reason I won’t buy myself is that I already have a big stake in Scottish Mortgate. I plan to leave my money invested for years and hopefully decades. So far, I haven’t regretted my decision.

The post Up 10% in a month! Are the Scottish Mortgage shares the best way to play the tech stock recovery? appeared first on The Motley Fool UK.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

More reading

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Harvey Jones has positions in Nvidia and Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended Amazon, Meta Platforms, Nvidia, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.