Scottish Mortgage’s Risk Overhaul and SpaceX Countdown: A New Chapter for the Trust

Scottish Mortgage Trust revamps risk framework as largest holding SpaceX prepares for IPO; NAV up 27.4%, £1.31bn buyback reduces discount, leverage eases.

The annual report released on 1 June 2026 for Scottish Mortgage Investment Trust does more than tick a regulatory box. It unveils a fundamentally reshaped risk framework at a moment when the trust’s single largest holding, SpaceX, is about to become a publicly traded company. The convergence of tighter governance and a potentially transformative IPO creates a narrative that goes well beyond routine reporting.

The board has condensed its risk categories, moving away from isolated assessments of macroeconomic, geopolitical and regulatory factors. Instead, these are now treated as amplifiers of investment and operational risks. Financial risk remains “high but stable,” reflecting persistent market volatility, the long-term growth strategy, exposure to unlisted companies and a rising portfolio concentration – a direct nod to SpaceX’s growing heft. That holding alone accounts for 19.3 per cent of the portfolio, worth approximately £3 billion on an initial investment of just £150 million. Manager Tom Slater describes SpaceX as a “dual monopoly” dominating orbital launches and the Starlink satellite network.

SpaceX is expected to list on 12 June with a valuation of around $1.75 trillion. Around 30 per cent of the offered shares will be reserved for retail investors. For Scottish Mortgage, the listing marks a dramatic increase in liquidity for a position that has long been a critical but illiquid driver of returns. The trust’s net asset value rose 27.4 per cent over the financial year to end?March 2026, with shareholders booking a total return of 26.8 per cent. Over a decade, the NAV return stands at 435.2 per cent, comfortably ahead of the FTSE All?World’s 233.9 per cent.

The board’s revamped risk register also highlights a climbing cyber threat, rated “moderate and rising.” Geopolitical tensions and increasingly sophisticated attacks – enabled by new technologies – could hit Baillie Gifford or external service providers, threatening confidentiality, system integrity or availability. On the positive side, leverage risk is easing. Debt as a percentage of the portfolio fell from 13 per cent to 11 per cent over the year, supported by lower liabilities and active balance sheet management. An undrawn revolving credit facility of $70 million provides additional firepower.

Discount risk, too, is on a moderating trend. The average discount to net asset value narrowed slightly from 9.7 per cent to 9.6 per cent during the year. Although the year-end discount widened from 9.0 per cent to 9.5 per cent, the shares have since traded at a premium. That shift owes much to an aggressive buyback programme: Scottish Mortgage repurchased 122.9 million shares for £1.31 billion in the financial year, bringing the two?year total to 307.7 million shares at a cost of £3.02 billion – roughly 22 per cent of the issued capital as of March 2024.

At the same time, the trust is now able to issue shares at a premium. On 1 June it placed 2.35 million shares from treasury at 1,516.50 pence each – above the NAV – meeting demand while protecting existing shareholders. Interactive Investor reported Scottish Mortgage as the most?bought investment trust for the third consecutive month in May 2026, underscoring sustained retail appetite.

The board is seeking renewed authority at the annual general meeting on 2 July to buy back up to 14.99 per cent of issued ordinary shares, but only when the shares trade at a discount to current NAV. It also reaffirms that it will not issue shares below NAV when debt is measured at fair value. The AGM, to be held at the National Galleries of Scotland in Edinburgh, will also vote on a final dividend of 2.97 pence per share, director elections and auditor appointments.

After the balance sheet date, the trust reported an unaudited net asset value of 1,428.71 pence (cum fair NAV) as of 29 May 2026. The shares currently trade at €18.11, up 30.42 per cent since the start of the year and roughly 4 per cent below their 52?week high. The upcoming SpaceX IPO, expected to be one of the largest in history, could test whether the board’s carefully recalibrated risk framework can keep pace with a holding that is about to transform from a private bet into a publicly traded colossus.