In recent months, Stocks and Shares ISA investors have been buying a handful of investment trusts. And popular investing platforms, including AJ Bell and interactive investor, have seen Scottish Mortgage Investment Trust (LSE: SMT) among the most widely picked.
It had fallen out of favour a bit after crashing from an all-time high at the end of 2021. But it’s been coming back, gaining 20% so far in 2026.
The AI surge lies partly beyond the popularity recovery. The investment trust includes Nvidia, ASML, Amazon, and Meta in its top 10 holdings. And spreading investors’ money across these, together with a wide range of other global stars, can hopefully reduce the risk with a bit of diversification.
Space risk
Well, I talk about reduced AI risk. But there’s a whole different helping of risk that comes with this too. More than 19% of shareholders’ cash is currently in Space Exploration Technologies — better known as Elon Musk’s SpaceX.
We’re expecting SpaceX to make its stock market debut with an initial public offering (IPO) in the next few months. And people are already talking about a $2trn market cap. Until that happens, Scottish Mortgage Investment Trust is one of the few ways UK investors can grab a slice. Is that part of the reason behind the sudden spike of interest from ISA investors? It does look that way.
Still, those who buy would also get a portion of MercadoLibre, Latin America’s biggest e-commerce platform. ByteDance, the Chinese company behind TikTok, is up among the top holdings too. Oh, and Shopify, the global commerce pioneer, adds to the attraction.
Invest in growth?
UK investors are looking at a nice bit of global diversification here, I’d say. And it’s not only about stepping onto the AI and space bandwagon. Still, Scottish Mortgage is very much focused on growth. And I reckon anyone who tucks some away in a Stocks and Shares ISA really should consider balancing it with a bit of diversification in safer stocks too.
So, do investors have to pay a growth premium to get in on the act? Well, the trust put its net asset value (NAV) per share at 1,378p at its most recent update. And with the shares at around 1,440p at the time of writing, we’re looking at a premium to NAV of only about 4.5%.
That can’t allow for the post-IPO valuation of SpaceX yet. And to me, it makes the price look like attractive value. Especially with headlines talking about a possible price-to-earnings (P/E) ratio of over 200 for SpaceX once it hits the stock market.
What to do?
This is not a low-risk investment by any means. Even without the SpaceX exposure, the future of AI valuations is still very much unknown. And I’d never buy a stock like this with the aim of a quick buy-and-sell profit on SpaceX. But I reckon those who want in on these exciting long-term growth possibilities might do well to consider Scottish Mortgage Investment Trust.
