Scottish Mortgage Trust beats QQQ and Cathie Wood’s ARKK ETF

Scottish Mortgage Investment Trust (LON: SMT) share price had a strong performance in the first quarter as the technology boom continued. 

The SMT stock jumped by almost 14% in Q1 while the Invesco QQQ, which tracks the Nasdaq 100 index, rose by 10.40%. Cathie Wood’s Ark Innovation Fund (ARKK) retreated by over 5% during the quarter.

ARKK vs Scottish Mortgage vs ARKK

Still, the Scottish Mortgage Trust has underperformed the Invesco QQQ ETF in the past 12 months and five years. It has risen by 40% in the past 12 months compared to QQQ’s 48%. The fund has beaten ARKK for a long time.

Scottish Mortgage’s performance is because of the strong performance of most of its portfolio companies. ASML, the European semiconductor giant, has jumped by 31% this year because of the strong demand for semiconductors that power artificial intelligence. 

SMT has a huge stake in Nvidia, the biggest semiconductor company in the world. Nvidia has jumped by over 83% this year. Most of these gains happened after Nvidia’s earnings revealed that its growth in Q4 surged by over 200%.

SMT stock has also benefited from its stake in companies like Amazon, Spotify, and Ferrari. All these companies have jumped by more than 20% this year.

Not all portfolio companies are doing well though. Tesla shares have crashed by almost 30% this year while Kering, the parent of Gucci, is one of the biggest laggards in the luxury industry. It recently announced that the demand for Gucci products in China was waning.

Snowflake, the Warren Buffett-backed technology company, is also not doing well as its stock crashed by over 18.79% this year. 

Meanwhile, Bytedance, the parent company of TikTok, is facing substantial pressure in the United States. The House of Representatives voted to ban TikTok in the US if it is not divested by Bytedance.

Notably, the Scottish Mortgage Trust has narrowed its discount to Net Asset Value (NAV). The discount stands at 4.50%, its narrowest point since 2021.

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