Despite its name and FTSE 100 status, Scottish Mortgage Investment Trust isn’t known for holding many UK stocks. Instead, it’s famous for making huge returns on US stocks like Amazon, Tesla, SpaceX, and Nvidia.
However, only 57% of the Baillie Gifford-managed trust’s assets are listed in North America. Most of the rest come from Asia (21%) and Europe (15.3%), including five stocks from the UK.
Here’s my favourite from this quintet of homegrown growth companies.
The not-so-famous five
At the end of February, Scottish Mortgage held 101 companies (48 public and 53 private). The five from the UK were Wise (LSE:WISE), Ocado, Revolut, Blockchain.com, and fintech Teya (formerly known as SaltPay).
Now, the last one (a payments firm) I’m not familiar with because it’s unlisted. And I note it’s a very small holding at just 0.06% of assets.
Similarly, cryptocurrency exchange and wallet provider Blockchain.com is private. Recently, it won regulatory approval in the UK after four years of trying. It has a far larger weighting in the portfolio (0.84%).
Revolut, the third unlisted UK holding, is very familiar because I’ve been a customer for years. And now the fintech powerhouse has finally got its full UK banking licence, I’m considering moving everything over to Revolut (current account, credit card, etc).
Were the digital bank to go public, I would look at buying shares. Because last year Revolut reported a pre-tax profit of $2.3bn, a 57% increase from 2024, on revenue of $6bn. This 38% margin is very impressive.
Total customer balances rocketed 66% to $67.5bn (£50.2bn), while 11 different product lines now exceed £100m in annual revenue.
Admittedly, the fintech faces fierce competition worldwide and its valuation looks steep (it was valued at $75bn in November and could top $100bn next time). But it already has banking licences in more than 30 markets, and is aiming for 100 over the next few years.
Hopefully Revolut has a dual listing in London at some point.
My favourite
So, out of Ocado and Wise, which is my favourite stock I can actually buy today? Well, that would have to be Wise, the low-cost international money transfer firm (I already hold shares).
Unlike loss-making Ocado, Wise is already firmly profitable. For the financial year to 31 March, it’s expected to record £370m in net income from revenue of £1.75bn.
Wise now has more than 11m active customers, including banks like Monzo and Standard Chartered, and delivers 74% of payments instantly. Looking ahead, it’s aiming to move trillions at low cost for both businesses and individuals (up from about £180bn last year).
As Scottish Mortgage writes: “Low costs and quality service have resulted in rapid growth and a high level of customer trust. Wise is now operating at a level of scale that gives it a distinct competitive advantage…Wise [has] the ability to grow many times from its current base“.
Unsurprisingly, the firm is a larger weighting in the trust’s portfolio, at 1.8%. However, fellow holding Revolut is a competitive risk. And the rivalry could be set to heat up, with Wise reportedly mulling up a UK bank licence.
However, its core global cross-border payments market is massive (£32trn annually!). With Wise stock trading at a reasonable 24 times forward earnings, I think it’s well worth considering.
