Scottish Mortgage to enter FTSE100

RNS Number : 2890Y

Scottish Mortgage Inv Tst PLC

01 March 2017

 

News Release: 1 March 2017          

Scottish Mortgage Investment Trust PLC to enter the FTSE100 on 17 March 2017.

The company announces a further cut in its annual management costs.

Scottish Mortgage Investment Trust PLC, the UK's largest conventional investment trust with gross assets in excess of £5 billion* as at 28 February 2017 and managed by Baillie Gifford, the Edinburgh based investment management partnership, will enter the FTSE100 index for the first time in its history, with effect from the close of the market on 17 March 2017.

Scottish Mortgage announces that, in recognition of its continued growth and success, there will be a cut in the annual management fees for the company, effective from 1 April 2017.

Scottish Mortgage already enjoys one of the lowest ongoing charges levels in the sector with an ongoing charge of 0.45% for the year to 31 March 2016, and both the Board and the Managers view this as important to enhancing long term returns for all shareholders. In 2014, the Managers and Board reduced the company's annual management fees in recognition of the growth of Scottish Mortgage and in furtherance of this aim. 

Since then Scottish Mortgage has continued to grow in scale.  Baillie Gifford has offered a further fee cut to the Board as part of the ongoing efforts by all parties to leverage the benefits of increasing scale for shareholders, primarily through reducing costs.  To this end, a tiered fee scale will be introduced from 1 April 2017.  The annual management charge will continue to be 0.3% on the first £4 billion of assets under management, but will fall to 0.25% thereafter.  

James Anderson, co-manager of the trust and partner of Baillie Gifford says:

"'We're thrilled by the progress over the decade since Scottish Mortgage became a genuinely global trust. The opportunities ahead are compelling but we need to keep improving and cutting costs is a vital and underestimated part of this process."

John Scott, Chairman of Scottish Mortgage, says:

"Admittance to the FTSE100 is a milestone for the company. It reflects the trust's strong investment performance over the past 10 years, in addition to which our assets have grown on the back of the issuance from treasury of over 130 million shares in the past three years.  This is testament to the success of our Managers' high conviction approach in owning what we consider to be the world's most exciting growth businesses. For the trust it brings increased visibility, and for shareholders looking to buy or sell it offers increased liquidity.

"Our size also brings economies of scale; I am delighted that we have agreed a reduction in the management fee.  The flat rate of 0.3% per annum which we have been paying was already amongst the lowest in the investment trust sector but I am delighted that, henceforth, the top tier of our assets will attract a fee of 0.25% per annum."

With any investment, capital is at risk.  The value of shares can fall as well as rise and investors may not get back the amount invested. The trust's risk could be increased by its investment in unlisted investments.  These assets may be more difficult to buy or sell, so changes in their prices may be greater.  Due to the trust's investments in overseas securities, changes in the rates of exchange may also cause the value of investments to go down or up. Scottish Mortgage also invests in emerging markets and is only suitable for those investors prepared to accept a higher level of risk. The Trust can borrow money to make further investments (sometimes known as 'gearing' or 'leverage'). The risk is that when this money is repaid by the Trust, the value of the investments may not be enough to cover the borrowing and interest costs, and the Trust will make a loss. If the Trust's investments fall in value, any invested borrowings will increase the amount of this loss.

Scottish Mortgage Investment Trust PLC Legal Entity Identifier: 213800G37DCS3Q9IJM38

Regulated Information Classification:

Additional regulated information required to be disclosed under the laws of a Member State

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For further information please contact:

Catharine Flood, Baillie Gifford	0131 275 2718
Roland Cross/  Cara Penkethman/ Josh Voulters/ Ed Hooper Four Broadgate	020 3697 4200

Notes to editors

Scottish Mortgage Investment Trust PLC

Scottish Mortgage is an actively managed investment trust, investing in a high conviction, global portfolio of companies with the aim of maximising its total return to its shareholders over the long term. It is jointly managed by James Anderson and Tom Slater.

Scottish Mortgage was founded in 1909 initially to offer loans to rubber growers in Malaysia. It is now the UK's largest conventional investment trust with gross assets of £5.1 billion* (as at 28 February 2017). It has a strong focus on providing a low cost long term investment proposition to its shareholders, with an ongoing charge of 0.45%.

* Total par value of loans & debentures amount to £507.29m as at 28 February 2017.

Baillie Gifford

Baillie Gifford & Co Limited is the Manager of Scottish Mortgage Investment Trust. Baillie Gifford currently employs over 900 people and has assets under management and advice of over £145 billion as at 31 December 2016. An asset management firm founded in 1908, it is headquartered in Edinburgh where most of its staff live and work.

 

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