Scottish Mortgage Navigates Rate Jitters, a SpaceX Debut, and a High-Stakes Private-Market Vote

Scottish Mortgage Investment Trust shares drop 7% amid rate hike fears, dividend concerns, and a pivotal shareholder vote on private market limits.

Scottish Mortgage Investment Trust enters a defining stretch where a flurry of events — an ex-dividend date, a landmark SpaceX initial public offering, and a shareholder vote on private-market exposure — are colliding against a backdrop of interest-rate anxiety and deteriorating conditions in private equity. The stock has already felt the heat.

Over the past week, shares in the trust have slipped roughly 7%, closing at €16.86. The trigger was a surprisingly robust US jobs report that pushed the probability of a Federal Reserve rate hike in December 2026 above 80%. Growth-orientated portfolios, especially those heavy on unquoted names, were hit hardest. Thursday marked the ex-dividend date for a final payout of 2.97 pence per share, bringing the full-year distribution to 4.57 pence.

The dividend itself, however, is less than fully covered by earnings. The total payout of £49.6 million exceeded net profit of £25.6 million, a gap that adds another layer of scrutiny to the trust’s financial position.

Private equity headwinds intensify

The broader private-equity market is showing clear signs of stress. A new study from Bain & Company warns of a harsh environment for dealmaking, citing trouble in software valuations, strain on private credit, and rising oil prices tied to geopolitical tensions. Transaction volumes in technology deals collapsed by 70% between the fourth quarter of 2025 and early 2026, with buyers and sellers struggling to agree on valuations. Only the highest-quality assets are changing hands.

This matters enormously for Scottish Mortgage because more than 40% of its portfolio is now parked in unlisted growth companies. A recent revaluation of SpaceX — the trust’s largest holding, now accounting for 21% of assets — pushed that figure past the previous 30% ceiling stipulated by the trust’s own rules.

Buyback policy tightens

The board has responded by changing the conditions for share repurchases. Going forward, the trust will only buy back its own stock when the market price falls below net asset value. That removes what had been a reliable support for the shares. In the last financial year alone, Scottish Mortgage spent £1.31 billion on buybacks.

The shift follows an erratic pattern in recent trading: the trust issued new shares at a premium to NAV one day, only to buy them back at a discount just days later. A new authorization to repurchase up to 14.99% of the outstanding shares will be put to shareholders at the annual general meeting, but it will be subject to the tougher price condition.

AGM showdown on private limits

Shareholders gather in Edinburgh on July 2 for what promises to be a pivotal vote. The board is seeking approval to raise the cap on unlisted investments by an additional £250 million. That would take the trust above its current self-imposed limit for private holdings, and the permission would need to be renewed annually.

The request effectively formalizes the trust’s growing bet on the private market at a time when that very market is under pressure. If the vote passes, the risk profile of the portfolio will climb further. If it fails, the managers may be forced to rethink their allocation.

SpaceX as the wild card

Giving the trust a potential escape route is the impending IPO of SpaceX, scheduled for June 12. The rocket company is targeting a valuation of $1.75 trillion. Scottish Mortgage recently marked up its stake, making the holding its single largest position. A successful listing would convert an illiquid bet into a publicly traded asset overnight, dramatically reducing portfolio risk.

Other big private names in the portfolio, including Anthropic and OpenAI, are also preparing market debuts, offering further de-risking opportunities down the line.

The long-term record remains impressive: net asset value has climbed more than 435% over the past decade, and it is still up roughly 21% year to date. But the coming weeks will test whether that momentum can survive the twin shocks of a rate-sensitive market and a deepening private-equity drought. The SpaceX IPO on Friday will be the first big clue — a strong debut could lighten the load, while a stumble would turn the trust’s heavy weighting into a serious drag.