Scottish Mortgage’s half-year: NAV up 22.9% and a clear win over the FTSE All-World
Scottish Mortgage Investment Trust has posted a strong first half to 30 September 2025. Net asset value (NAV) per share rose 22.9% on a total return basis, ahead of the FTSE All-World Index at 15.4%. The share price total return was 20.9%.
Management say the market is again rewarding companies driving deep technological change. That theme ran right through the portfolio, from AI infrastructure to digital platforms and electrification.
Key numbers you should know
| Metric | Six months to 30 Sep 2025 |
|---|---|
| NAV total return (borrowings at fair) | 22.9% |
| Share price total return | 20.9% |
| FTSE All-World total return | 15.4% |
| Five-year total return (NAV) | 30.3% |
| Ten-year total return (NAV) | 472.4% |
| NAV per share (book / fair) | 1,238.6p / 1,271.3p |
| Share price | 1,137.5p |
| Discount to NAV (book / fair) | 8.2% / 10.5% |
| Ordinary shares in issue | 1,125,821,279 |
| Buybacks in period | 75.2 million shares for £765.4 million |
| Net assets | £13,944.2 million |
| Gearing (book, net of cash) | 11% (13% at 31 March 2025) |
| Proposed interim dividend | 1.60p per share |
What drove the outperformance: AI, platforms and electrification
The biggest tailwind was the global build-out of artificial intelligence. Enablers such as ASML and TSMC delivered strong returns as spending on compute capacity stayed a priority for governments and enterprises. NVIDIA added to that momentum. Higher up the technology stack, Cloudflare and Snowflake benefited as customers upgraded data and software architectures to handle AI-enhanced workloads.
Digital platforms also chipped in. Roblox, Meta, Spotify and Netflix appreciated as user engagement and monetisation improved. In commerce and logistics, MercadoLibre, Sea, Shopify and Doordash advanced with better profitability and capital efficiency. Electrification names – notably CATL and Tesla – contributed positively as battery demand and EV penetration continued to rise.
The common thread here is scale, compounding and long-term thinking. Management’s message is simple: patience through the rough patch left several holdings stronger and more competitively positioned.
Discount and buybacks: still wide, but accretive action continues
The share price discount to NAV widened from 9.0% to 10.5% over the half, despite heavy buyback activity. Scottish Mortgage repurchased 75.2 million shares for £765.4 million in the period and has bought back £2.6 billion since March 2024 under its enhanced programme.
The Board highlights several benefits from buybacks: limiting discount volatility, NAV accretion, a more stable register and a discount narrower than pre-March 2024 levels. The Board and Managers remain committed to continuing buybacks while balancing other uses of capital such as new investments and debt reduction.
Dividends and earnings: steady interim, Hero status in sight
Revenue earnings rose versus the comparable period, helped by the absence of last period’s Northvolt accrued bond income write-off. Income from the portfolio was slightly lower, but the Board proposes an unchanged interim dividend of 1.60p per share.
Scottish Mortgage is an AIC Dividend Hero, with 43 consecutive years of dividend growth. The Board expects to declare an increased final dividend to maintain that record. Key dates: ex-dividend 20 November 2025, record date 21 November 2025, payment 12 December 2025. A Dividend Reinvestment Plan is available, with elections due by 25 November 2025.
Portfolio moves: new names reflect the next wave
New investments mirror where the economy is heading. In software and the creator economy: Figma, now a standard for collaborative design, and AppLovin, which helps mobile apps and games acquire users efficiently. In China, Xiaohongshu (Little Red Book) targets younger urban consumers and has scope to grow advertising and ecommerce.
Electrification exposure expanded with a new position in CATL and additions to BYD. In frontier AI, Scottish Mortgage invested in Anthropic, citing technical depth, safety focus and commercial potential. Funding came from trims to Amazon, Roblox, Spotify, Meta Platforms, Netflix, Tempus AI, MercadoLibre and Shopify – reductions were portfolio-balancing, not a loss of conviction.
Private assets: sizeable slice, one IPO uplift
Level 3 (private) investments were valued at £4,157.4 million at 30 September 2025, against total investments of £15,488.8 million – roughly 26.8% of the portfolio by value. During the half, Heartflow Inc moved from Level 3 to Level 1 following its listing.
Valuations are set under IPEV guidelines using market-based techniques such as revenue or earnings multiples, milestone analysis and, where relevant, discounted cash flow. The private book is reviewed on a three-month cycle and at reporting dates or trigger events.
Balance sheet and cash flows: gearing down, firepower maintained
Borrowings at book stood at £1,588.5 million with a weighted average cost of 3.1%. Net gearing eased to 11% from 13% at year-end. Cash and cash equivalents were £68.2 million.
On the income statement, gains on investments totalled £2,653.9 million and currency gains £33.9 million. Net return per share was 229.13p, almost entirely capital (227.58p) rather than income (1.55p). Cash from investing activities was a net inflow of £891.5 million, while financing activities were a net outflow of £804.0 million, reflecting buybacks and dividends.
Long-term picture and the risks to watch
Over five years, NAV is up 30.3% versus the FTSE All-World at 85.4%. Over ten years, Scottish Mortgage’s NAV return of 472.4% comfortably exceeds the index at 263.3%. The mixed record underscores the trust’s own mantra: returns are not delivered in a straight line.
Principal risks are unchanged and include financial, private company valuations, investment strategy, climate and governance, discount, regulatory, custody/depositary, operational and cyber, leverage, political and emerging risks. The portfolio’s limited income profile remains a structural feature, given the focus on growth companies that reinvest cash flows.
My take: why this update matters for investors
- Positive: Broad-based strength in AI infrastructure, digital platforms and electrification delivered a 22.9% NAV total return, beating the global benchmark.
- Positive: Gearing has been nudged lower to 11%, and the substantial buyback continues to add NAV per share and support the register.
- Watch-outs: The discount widened to 10.5% at fair value despite buybacks, and five-year NAV returns lag the index. Sentiment towards growth and private assets still drives volatility.
- Income: The interim dividend stays at 1.60p, with the Board signalling an increased final dividend to preserve 43 years of consecutive growth.
In short, this was a strong half powered by the same engines Scottish Mortgage has backed for years – scale, networks and compounding in sectors undergoing structural change. If management’s patience continues to coincide with operational progress across holdings, the trust is set up to keep turning innovation into long-term NAV growth. As ever, discounts, private valuations and macro wobble can all jolt the share price along the way.
