Scottish Mortgage Funding Belief (LSE: SMT) shares have been one of many FTSE 100‘s high flyers in the last year. Its collection of exciting, future-thinking companies has pushed the share price up 68% since late 2023. With the chance to get some exposure to hot names like SpaceX, TikTok and Nvidia, investors might be wondering whether this is one to consider snapping up today? I believe so, and here’s why.

British investing

An fascinating quirk of British investing is how overrepresented a number of established firms are. Hargreaves Lansdown releases a report on this from time to time, exhibiting the place folks put their cash through their ISA accounts. 

The information is a bit predictable, to be trustworthy. Every time, massive FTSE 100 hitters like BP, Aviva and Authorized & Common dominate. 

The issue? These are largely defensive shares, and are generally unflatteringly referred to as dinosaur shares. That’s to not say they’re dangerous firms, however oil majors and large insurance coverage corporations don’t count on to have oodles of quick progress forward of them.

Enter Scottish Mortgage. You possibly can nearly view this fund because the anti-FTSE 100, such is its deal with non-British progress shares. They vary from electrical automobiles, battery expertise, or just a web-based Amazon lookalike in Latin America. Lots of the firms are unlisted too, so there are shares I can’t purchase available on the market included. 

Why would possibly this be good? As a result of it provides diversification. It’s exhausting to pinpoint anybody firm that can go on a tear, however with a basket of 30 of them? That’s lots of probabilities to strike gold. 

And in a world the place many are saying we’re standing on the precipice of a revolution in synthetic intelligence, I wouldn’t wish to be watching from the sidelines.

The dangers

Buyers ought to concentrate on the dangers too. To begin with, the corporations on this fund run at sizzlingly excessive valuations. 

The price-to-earnings ratios of Amazon (50), Meta (29), Nvidia (46), and Ferrari (51) look huge in comparison with the FTSE 100 common (14). That’s par for the course with progress shares, particularly good ones, however it means much less security. 

For instance, the explanation eye-wateringly valued web shares fell to this point in the course of the dotcom crash was just because they’d to this point to fall. Scottish Mortgage might additionally sink like a lead balloon in any market turbulence.

Given the worldwide nature of its constituents, the specter of President Trump’s tariffs can also be one thing traders ought to regulate. However how severe would possibly these be? 

Properly, we obtained a bit style this week. The primary day after he slapped tariffs on China, Mexico and Canada, the S&P 500 was down 0.76%. The following day it was up 0.66%. The MCSI world index was up on each days. 

On these numbers, the markets don’t suppose there’s a lot of an issue. Only a storm in a teacup then? I’d say it’s too quickly to inform. However I feel the early indicators are this shouldn’t be a purple flag for anybody contemplating investing in Scottish Mortgage shares.