Scottish Mortgage Investment Trust posts a 22.9% NAV gain in H1 FY26. Explore key drivers, new tech bets, and investor sentiment trends behind the turnaround.

What is the market sentiment around Scottish Mortgage Investment Trust following the NAV rally?

Scottish Mortgage Investment Trust PLC (LSE: SMT) has reignited investor interest after reporting a 22.9% rise in net asset value (NAV) per share for the six-month period ending 30 September 2025. The share price total return also climbed 20.9%, indicating strong but slightly lagging market recognition relative to portfolio value. At the close of the period, the share price was 1,077.5 GBX, reflecting a 1.73% dip on the day amid broader market fluctuations, with a modest widening in the NAV discount to 10.5%.

Despite the rally, Scottish Mortgage Investment Trust continues to trade below NAV. This persistent discount remains a source of institutional concern, though sentiment is shifting from defensive to cautiously optimistic. With capital reserves surging and continued conviction in private and public holdings, many fund managers and long-horizon investors see the trust’s current valuation as an opportunity rather than a red flag.

In terms of trading dynamics, share repurchases have acted as a key sentiment stabilizer. Over the six-month period, Scottish Mortgage Investment Trust repurchased 75.2 million shares at a cost of £765.4 million. Cumulatively, £2.6 billion has been deployed in buybacks since March 2024. These measures are helping to support the stock amid elevated volatility in global growth equity.

Which sectors and companies were responsible for the investment trust’s outperformance?

Scottish Mortgage Investment Trust’s portfolio outperformance was powered by exposure to some of the most consequential structural trends of the decade: artificial intelligence, digital platforms, electrification, and e-commerce infrastructure. This strategic concentration translated into meaningful upside as market sentiment pivoted toward companies leading global innovation.

Notable contributors included semiconductor supply chain leaders ASML and TSMC, both of which benefited from rising demand for advanced chip manufacturing amid an AI-driven compute buildout. NVIDIA’s continued dominance in AI chips further validated the trust’s positioning, while companies like Snowflake and Cloudflare demonstrated increasing demand for cloud-native digital infrastructure.

Digital platforms such as Meta Platforms, Roblox, and Spotify saw improved monetization, with the former two benefiting from stronger user engagement, creator incentives, and cross-platform integration. Netflix’s disciplined content investment strategy also delivered performance gains in an otherwise maturing streaming sector.

From a geographical diversification lens, ecommerce holdings in Latin America and Southeast Asia, specifically MercadoLibre and Sea Limited, outperformed due to expanding fintech arms and improving unit economics. Meanwhile, Shopify and Doordash demonstrated a return to capital efficiency following previous heavy infrastructure investments.

In electrification, Chinese battery heavyweight CATL and American electric vehicle manufacturer Tesla delivered robust performance, with both names benefiting from vertical integration and global demand tailwinds. BYD also received capital allocation increases, reaffirming its position as a central player in transport decarbonisation.

How is Scottish Mortgage positioning its portfolio for the next cycle of tech and energy growth?

During the reporting period, Scottish Mortgage Investment Trust initiated several high-conviction positions in emerging technology and next-gen platforms. Among the most significant was Anthropic, an AI research firm focused on large language models and safe deployment practices. The investment aligns closely with the trust’s emphasis on foundational technologies that could reshape enterprise software and decision systems.

Another new entrant, Figma, is becoming a dominant collaborative design tool for digital products, positioning itself as indispensable infrastructure in software development workflows. AppLovin also entered the portfolio, signaling interest in adtech monetization pipelines for mobile apps, an increasingly important area as smartphone engagement deepens globally.

The trust’s expansion into China’s youth-driven lifestyle and ecommerce platform Xiaohongshu underscores a thematic tilt toward Gen Z content, creator economies, and influencer-led commerce. With a rapidly growing base of urban users, Xiaohongshu represents a strategic bet on evolving consumer behavior in Asia.

In electrification, the trust added to its stake in BYD and invested in CATL, reinforcing exposure to battery tech and global energy storage infrastructure.

The portfolio’s reshaping was partially funded through trims in existing winners including Meta Platforms, Amazon, MercadoLibre, Spotify, and Shopify. None of these reductions signal a loss of conviction, but rather a disciplined approach to capital rotation aimed at increasing exposure to earlier-stage growth opportunities.

What do the financials say about Scottish Mortgage’s liquidity, gearing, and dividend outlook?

As of 30 September 2025, Scottish Mortgage Investment Trust reported net assets of £13.94 billion, up from £12.08 billion as of March. The capital reserve jumped to £12.9 billion, reflecting £2.65 billion in investment gains. Revenue reserves also increased to £18 million, supporting the continuation of the interim dividend at 1.60 pence per share.

Gearing was reduced to 11% from 13%, reflecting improved liquidity conditions and more favorable asset-to-liability alignment. Cash and cash equivalents rose substantially to £68 million from just £9 million six months earlier, indicating strong operational and investment flexibility.

The board reiterated its intention to maintain its AIC Dividend Hero status, having raised its dividend for 43 consecutive years. A final dividend increase is expected, despite the trust’s relatively low income profile, given its growth-heavy portfolio.

How are private company investments influencing portfolio performance and risk appetite?

Private market holdings now represent over 27% of the portfolio, valued at £4.16 billion. This marks a meaningful increase from the previous period and reflects Scottish Mortgage Investment Trust’s ongoing confidence in early-stage innovation as a source of long-term alpha.

New investments such as Anthropic and Xiaohongshu, along with continued exposure to unlisted entities through preference shares, ordinary shares, and convertible notes, indicate a clear strategy to secure early access to future category leaders. While illiquidity and valuation transparency remain concerns, the trust adheres to International Private Equity and Venture Capital Valuation (IPEV) guidelines and conducts quarterly valuation reviews, with additional checks triggered by material events.

This risk-tolerant approach aligns with Scottish Mortgage Investment Trust’s high-conviction, long-duration mandate. Private investment selection favors founder-led firms with disruptive technologies, differentiated products, and network effect-driven growth.

How are long-horizon investors and institutional funds interpreting Scottish Mortgage’s renewed performance momentum and discount positioning in 2025?

Scottish Mortgage Investment Trust has staged a solid comeback in H1 FY26, riding the global wave of innovation-led optimism. However, its persistent discount to NAV suggests the market remains partially unconvinced. The trust’s ability to narrow this gap may hinge on sustained performance in private markets, continued buyback execution, and better communication around long-term value realization.

From a retail and institutional perspective, the investment trust continues to offer one of the most accessible routes to long-horizon innovation exposure across both developed and emerging markets. Its willingness to act countercyclically, especially during periods of market dislocation, remains its defining trait.

Future sentiment will likely track macro conditions around interest rates, inflation, and geopolitical risk, but Scottish Mortgage’s positioning in AI, electrification, and global ecommerce ecosystems is expected to support further upside over the medium term.

Key takeaways from Scottish Mortgage Investment Trust’s H1 FY26 results and outlook

• Net Asset Value per share increased 22.9%, significantly outperforming the FTSE All-World Index’s 15.4% gain during the period.
• Share price total return rose 20.9%, although the discount to NAV widened from 9.0% to 10.5%.
• High-conviction positions in ASML, TSMC, NVIDIA, Meta Platforms, MercadoLibre, and CATL drove portfolio gains.
• New investments in Anthropic, Figma, AppLovin, Xiaohongshu, and CATL align with next-generation growth themes.
• Share buybacks reached £765.4 million in the half-year; total buybacks since March 2024 stand at £2.6 billion.
• Interim dividend maintained at 1.60p per share, with continued AIC Dividend Hero status expected.
• Gearing reduced to 11%; cash position improved significantly to £68 million.
• Private investments now account for over 27% of the portfolio, guided by IPEV-compliant valuation practices.
• Investor sentiment is shifting from cautious to constructive, but the persistent NAV discount signals market hesitancy.

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