Scottish Mortgage: should you hold, fold or be bold?

Scottish Mortgage, a FTSE 100 investment trust, has experienced significant volatility, with share prices falling 56% from their November 2021 peak. This downturn stems from a shifting macroeconomic environment characterized by rising inflation and interest rates, which disproportionately impact the trust’s high-risk, long-duration growth assets. Skepticism regarding the valuation of the trust’s 30% allocation to private, unlisted companies has further widened the discount to net asset value. While the trust maintains a long-term focus on structural technological change, recent boardroom tensions and concerns over the management of private equity positions have prompted scrutiny. Despite these challenges, the strategy remains committed to identifying exceptional growth companies. Investors should view Scottish Mortgage as an adventurous satellite holding, as its recovery potential remains closely tied to future interest rate trajectories and the accuracy of its private portfolio valuations.