Scottish Mortgage Funding Belief (LSE: SMT) shares had been marching greater in the present day (23 Might) after the FTSE 100 development fund reported its annual outcomes.

As I write, the inventory is up 2.7% to 893p, which places it inside touching distance of a contemporary 52-week excessive.

The Edinburgh-based belief possesses in all probability probably the most boring title on earth but additionally arguably probably the most thrilling development portfolio. By no means decide a e book by its cowl, as they are saying.

It’s a core holding in my retirement portfolio. Was there something within the report back to make me contemplate rising my place? Let’s discover out.

Again to development

Within the 12 months to 31 March, the fund’s share price elevated 32.5% and the web asset worth (NAV) of its holdings rose by 11.5%. This compares to a 21% achieve for the FTSE All-World Index (in sterling phrases).

The power of the share price efficiency relative to NAV over the interval displays the sharp discount within the low cost (after deducting borrowings at truthful worth) from 19.6% to 4.5%.

Web returns after taxation totalled £1.37bn towards a lack of £2.92bn within the prior yr. As a shareholder, this was good to see following two straight years of unfavourable returns.

In March, the board introduced not less than £1bn for the aim of share buybacks over the next two years. This has typically gone down properly with analysts and traders.

Lastly, the board really useful a 3.4% improve to the dividend, bringing it to 4.24p per share. This maintains a multi-decade run of dividend development. That mentioned, no one is probably going shopping for the 0.5%-yielding shares for earnings.

A decade of outperformance

Scottish Mortgage is barely curious about the long run and asks to be judged over five-year intervals or extra.

How is it doing on that entrance then?

Very properly, really. Over 10 years, it has completely crushed its benchmark. On a five-year share price foundation, it’s so much tighter, thoughts.

Whole return efficiency (to 31 March)

It’s all about AI, in fact

Unsurprisingly, the standout theme driving the returns was synthetic intelligence (AI). The 2 high holdings, Nvidia and ASML, surged 219% and 40%, respectively over the interval. Amazon shares jumped 71%.

In the meantime, the belief added world chip foundry Taiwan Semiconductor Manufacturing Firm (TSMC) to the portfolio.

Deputy supervisor Lawrence Burns mentioned: “TSMC can be thought of as a royalty on global computing power, just as Nvidia can be thought of as a royalty on AI.”

He cited celebrated economist Brian Arthur, who beforehand predicted that AI would develop into probably the most important invention for the reason that Gutenberg printing press in 1440.

Burns mentioned AI is “externalising intelligence” and its influence is prone to be “profound and immeasurable“.

Remaining ideas

Tom Slater, the belief’s lead supervisor, mentioned there had been a discount in Tesla, that means that SpaceX was now a bigger holding. In the meantime, Chinese language tech large Tencent was bought utterly.

One factor I’d spotlight right here is that the portfolio is now very closely tilted in the direction of AI. Any slowdown on this tech growth might hit the worth of the belief’s holdings.

Occurring Nvidia’s newest blockbuster outcomes, I don’t count on that to occur any time quickly. However it’s a threat.

Nonetheless, if I didn’t have already got such a big holding, I’d actually contemplate shopping for Scottish Mortgage shares in the present day as a approach to put money into AI.