Scottish Mortgage: Jobs Shock and a Structural Pivot Converge Ahead of AGM

A hotter-than-expected US jobs report has delivered a sudden reality check to growth-stock investors, hitting the Scottish Mortgage Investment Trust with a sharp sell-off just days before a pivotal shareholder vote on private-market exposure. The fund, already wrestling with a widening gap between its portfolio value and share price, now faces a double test: the macro headwind of rising rate expectations and a strategic decision that could redefine its risk profile.

Jobs data triggers a growth rout

The turmoil began last Friday, when the US economy added 172,000 new positions in May — nearly double the consensus forecast. That sent the probability of a Federal Reserve rate hike by December 2026 rocketing from 45% to above 80%. Growth stocks, acutely sensitive to higher discount rates, bore the brunt. The Nasdaq tumbled 4.18% and the Philadelphia Semiconductor Index collapsed 10.3%. By Monday, the selling had spread across Asia — South Korea’s KOSPI plunged more than 8% in the first 20 minutes, triggering a circuit breaker, while Hong Kong’s Hang Seng lost 1.15%.

Scottish Mortgage, whose portfolio is heavily weighted toward high-growth names, found itself in the epicentre of the sell-off. The trust’s shares slid to €16.75 by Monday, down nearly 7% over the previous seven days. That left them roughly 14% below the 52-week high of €19.50 hit on 25 May. The RSI sat at 43.7 — neutral, but with no clear oversold signal.

NAV paradox deepens

The irony is that the underlying portfolio has rarely looked stronger. Thanks in large part to a revaluation of its SpaceX stake, the net asset value including fair-value adjustments recently climbed to 1,500.90 pence, up from 1,493.98 pence. SpaceX alone now accounts for 21.0% of total assets, up from 17.9% at the end of April. Yet the share price, which also traded at €16.89 on a recent day before slipping further, has failed to keep pace. The disconnect between NAV and market price is the core puzzle facing investors.

Private holdings now make up more than 40% of the fund’s assets, with names such as ByteDance, Stripe and Databricks sitting alongside SpaceX. That concentration amplifies both the upside potential and the liquidity risk — private valuations are less transparent than listed prices, and converting them into cash under stress is far harder. The market is clearly demanding a discount for that illiquidity.

A shift in buyback strategy

The trust’s management has already responded by tightening the rules on share buybacks. In the past two financial years, Scottish Mortgage repurchased 307.7 million shares — about 22% of the then-outstanding capital — at a cost of £3.02 billion. Last year alone, £1.31 billion flowed into buybacks. But going forward, repurchases will only be triggered when the share price falls below NAV, removing the more aggressive support the fund had previously deployed. That change, combined with the growing private-asset weighting, has made the discount debate more acute.

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

AGM: three decisions on 2 July

All eyes are now on the annual general meeting in Edinburgh on 2 July, where shareholders will vote on three key resolutions.

The first would raise the cap on private investments from the current 30% of assets — a limit that already comes with a £250 million exception — giving management more room to participate in late-stage funding rounds. The second is a final dividend of 2.97 pence per share, which would bring the full-year payout to 4.57 pence. That represents a 4.3% increase and would extend the trust’s unbroken dividend growth streak into its 43rd year.

The third resolution is a new buyback authority, this time capped at 14.99% of issued ordinary shares and usable only when the stock trades below NAV. The message is clear: management wants to preserve capital for private deals while still offering a floor on the discount, albeit a softer one.

Long-term record still commands respect

Despite the near-term noise, the trust’s long-run numbers are hard to ignore. In the financial year to March 2026, NAV rose 27.4% and the shares delivered a total return of 26.8%. Over the past decade, NAV has surged 435.2%, dwarfing the FTSE All-World’s 233.9% gain. Ongoing costs remain low at 0.33% of average NAV, with no performance fee. Year-to-date, the share price is still up about 21.5%, even after the recent setback.

Meanwhile, a broader trend offers a faintly bullish counterpoint. The average discount to NAV across all British investment trusts fell to 9.6% at the end of May — below 10% for the first time in nearly four years, according to the Association of Investment Companies. That suggests a sector-wide re-rating may be underway, even if individual trusts like Scottish Mortgage continue to trade at wider discounts.

For Scottish Mortgage, the AGM vote will signal whether shareholders are comfortable with the fund’s increasingly private-market orientation — or whether the discount persists as a persistent drag. A strong mandate for flexibility would bolster the growth narrative; a tight vote could keep the gap between portfolio value and market price visible for months to come.