Scottish Mortgage: The Widening Gulf Between NAV and Share Price Tests Investor Patience

A curious disconnect is playing out at Scottish Mortgage Investment Trust. The portfolio’s net asset value keeps climbing — yet the share price is heading in the opposite direction. Last week the fund reported a cum-fair NAV of 1500.90 pence, up from 1493.98 pence just days earlier, after the board revalued its stake in SpaceX. But by Friday’s close the stock had shed 5.39% on the week, landing at €17.10 in German trading for a single-day decline of 3.88%.

The rally in the fund’s underlying assets owes almost entirely to SpaceX, which now accounts for 21.0% of total assets — up sharply from 17.9% at the end of April. That single private holding has become both a tailwind and a source of unease. Investors appear to be pricing in concentration risk and limited liquidity, even as the NAV series shows a clear upward trajectory: the cum-fair NAV has moved from 1434.80p to 1493.98p and then to 1500.90p in successive readings.

What tipped the share price into the red, however, was an external shock. The US labour market delivered a stronger-than-expected report on Friday, with 172,000 new jobs added in May. Markets took that as a signal that the Federal Reserve might hold off on rate cuts, and technology shares bore the brunt of the sell-off. The Philadelphia Semiconductor Index suffered its steepest one-day loss since March 2020. Scottish Mortgage’s portfolio was caught directly in the blast: Nvidia tumbled 6.2%, Broadcom fell 7.9%, and Meta Platforms dropped more than 5% amid reports it was selling billions of dollars in stock to fund AI infrastructure.

Should investors sell immediately? Or is it worth buying Scottish Mortgage Investment?

Against this macro headwind, the fund’s technical picture has held up reasonably well. The share price remains above its 50-day moving average of €16.57 by a margin of 3.19%, and the 100-day average of €15.36 still sits comfortably below. The Relative Strength Index stands at 47.4 — neutral territory — and the annualised volatility of 34.91% suggests the swings may continue. Year to date, the stock is still up 23.11%, though it sits 12.31% below its year-high of €19.50 and a hefty 46.40% above the 52-week trough of €11.68.

Investors are now looking to a specific catalyst to reset the narrative. The initial public offering of SpaceX is scheduled for June 12, with a fixed issue price of $135 per share and a goal of raising $75 billion. Baillie Gifford values the holding internally at roughly $1.6 trillion, slightly below the IPO target range of $1.75 trillion to $1.77 trillion. A successful listing would not only provide a market-validated reference price for the fund’s largest private asset but also unlock much-needed liquidity in an otherwise illiquid part of the portfolio.

Meanwhile, the trust’s long-term dividend record offers a different kind of reassurance — albeit one that matters less to a growth-focused vehicle. Scottish Mortgage has raised its payout for 43 consecutive years. For the financial year ended March 2026, the total dividend will increase by 4.3% to 4.57 pence per share, with a final dividend of 2.97p due on July 10 subject to shareholder approval. The ten-year average growth rate of 4.6% per year underscores a discipline that coexists with high-volatility tech bets. The payout ratio remains low at 1.44%, reflecting Baillie Gifford’s commitment to ploughing most capital back into the portfolio of roughly 50 listed and private companies.

The trust also posted strong annual results: a NAV total return of 27.4% and a share price return of 26.8%, comfortably beating the FTSE All-World index’s 18.0% return in sterling. The annual general meeting is set for July 2, 2026 in Edinburgh, where shareholders will formally vote on the final dividend and the board’s strategic direction. Until then, the central question remains whether the market will close the gap between NAV and share price — or whether the weight of macro uncertainty and private-asset opacity will keep it open.

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