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Scottish Mortgage Investment Trust (LSE:SMT) shares appear to have boomed over the past two months. The stock’s up 16% and this means £10,000 invested then would be worth £11,600 today. That’s a great return in a very short period of time.
However, this belies the volatility we’ve experienced this year. Scottish Mortgage shares slumped in early April as Donald Trump announced his trade policy.
Interestingly, Scottish Mortgage stock, which primarily invests in US-listed stocks and privately-held growth companies, hasn’t recovered to its February highs. It’s currently trading 11% below these highs, while the Nasdaq — the US growth-oriented stock market index — is actually much closer to its pre-Liberation Day peak.
So why is this? Well, obviously Scottish Mortgage’s portfolio doesn’t mimic the Nasdaq. As such, investors may be less keen on the Scottish Mortgage portfolio. But it’s also important to recognise that the pound has appreciate 5.5% against the dollar over the last two months.
This currency appreciation is very important. Essentially, it means if I bought £10,000 of dollar-denominated stock (any US-listed stock) two months ago, and the stock stayed flat in dollar terms, it would be worth £9,450 when converted back.
And with Morgan Stanley suggesting the pound could reach $1.51 in the most optimistic scenarios by the latter half of 2026, it’s worth considering what impact this would have on Scottish Mortgage.
The Scottish Mortgage portfolio
Scottish Mortgage’s top holdings have really shifted over the past year, reflecting an active approach to capturing long-term growth opportunities. As of April, the portfolio’s largest positions are Space Exploration Technologies (SpaceX) at 7.8% and MercadoLibre at 6.9%, both of which have surged into prominence after being far less significant in previous years. This marks a sharp change from just months ago, when tech giants like Nvidia and Tesla featured heavily in the top five holdings.
Nvidia, once a core holding, has been reduced significantly and no longer appears in the top 10 following concerns about its valuation and limited further upside after strong recent performance. This evolution highlights Scottish Mortgage’s willingness to pivot away from yesterday’s winners toward emerging leaders in innovation and global disruption. Other top holdings include Wise, which has recently announced plans to move its primary listing to the US.
Worth investing in?
Scottish Mortgage is well represented in my pension and I top up when the opportunity presents itself. I certainly believe it’s a stock worth considering. While it may be volatile in the near term, I have faith that the general direction will be upwards. Despite this, I’m aware of risks. The company uses leverage — borrowing to fund investments — and this can amplify volatility in the market. In other words, if the stock market — notably growth sectors — starts to fall, Scottish Mortgage could underperform. Currency appreciation, as noted above, is another factor.
