Investec downgrades Scottish Mortgage to 'Sell' over potential 'sharp' correction

Concerns over private assets exposure

Investec has downgraded Baillie Gifford’s Scottish Mortgage trust to ‘Sell’ due to concerns over a “stretched” balance sheet, a late-stage venture capital industry valuation reset and a continued unsupportive macro backdrop.

Over the last ten-year period, the £13.8bn investment trust returned over 430%, according to data from the Association of Investment Companies, but it has struggled in 2022. Six months after its peak in November 2021, the net asset value fell 45%.  In a research note published today (19 November), analysts Alan Brierley and Ben Newell at Investec, said that this was due to a reversal in highly supportive macro tailwinds, leading to markets beginning to discount the impact of higher inflation on long duration assets. "Although there has since been a stabilisation, we fear that the n...