Scottish Mortgage’s Private Equity Mandate Expands as Shares Command 6.3% Premium

Shareholders approve £250M for unlisted tech giants like SpaceX and ByteDance as trust trades at 6.3% premium, driving new share issuance and 52.5% one-year return.

Scottish Mortgage Investment Trust shareholders have given the green light for an additional £250 million to be directed toward private companies, a move that deepens the trust’s bet on unlisted tech giants such as SpaceX, ByteDance and Anthropic. The approval, secured at the annual general meeting in April, comes as the fund’s shares trade at a hefty 6.3% premium to net asset value — a level not seen in recent years and one that has turned the trust from a heavy buyer of its own stock into a prolific issuer of new shares.

The premium over NAV, which stood at 1,532 pence on Tuesday against a fair value of 1,410 pence, signals that investors are willing to pay up for access to the fund’s concentrated portfolio of growth stocks and private unicorns. With 40% of assets already parked in unlisted businesses, the new £250 million allowance gives manager Tom Slater and his team more firepower to double down on high-growth holdings like Anthropic, which the trust describes as delivering “unprecedented B2B software growth.”

Just two years ago, the picture was very different. Scottish Mortgage was ploughing roughly £3 billion into share buybacks as the trust traded at a steep discount. Now the pendulum has swung. Since mid-May, the fund has issued new shares almost daily, tapping into unrelenting investor demand. On 20 May, 2.4 million shares were created at 1,466 pence, followed by another 2.25 million two days later. The total number of outstanding shares now sits at about 1.1 billion.

The issuance flurry is a direct consequence of the premium. Under normal market mechanics, an investment trust trading above NAV can create new stock to meet demand, boosting liquidity while capping the upside for existing holders. For the broader sector, the trend is unmistakable: total issuance by UK investment trusts surged 78% in the first quarter to £303 million, and April added another £248 million.

The appetite for Scottish Mortgage’s equity is underpinned by stellar recent performance. Over one year, the trust delivered a total return of 52.5%, dwarfing the sector average of 35.1% and the benchmark’s 28.5%. The three-year record is equally impressive at 131.3%, though the five-year figure of 30.9% reflects a trying period for growth stocks. Over a decade, however, the cumulative return of 504.5% places the trust among the top performers in its peer group.

A key catalyst in recent weeks has been Arm Holdings, the chip designer whose shares soared 47% in a single week and are up 180% over the past year. Arm is just one piece of a larger AI infrastructure bet that includes Nvidia, TSMC, Amazon and Meta, with the portfolio heavily tilted toward US and Asian markets. At the same time, the private equity holdings — led by SpaceX and ByteDance — continue to provide the trust’s signature differentiation.

On the cost side, investors pay an ongoing charge of just 0.31%, while gearing stands at a moderate 8%. The dividend yield is negligible at 0.29%, confirming the trust’s identity as a pure growth vehicle rather than an income play. This month also brings the next AGM, scheduled for 2 July in Edinburgh, where shareholders will vote on a final dividend of 2.79 pence per share. The ex-dividend date falls on 15 June. On the board, Professor Maxwell is stepping down and Heather Manners will take a seat.

The sustainability of the share premium hinges on continued enthusiasm for technology and private equity. Should the mood sour, the trust would likely revert to a discount, forcing a return to buyback mode. For now, the market is rewarding the portfolio’s mix of AI exposure and unlisted growth stories — and Scottish Mortgage is selling into the strength.