Scottish Mortgage, the £2bn global fund run by Baillie Gifford's new investment director James Anderson, recovered ground in the second half to match its benchmark for the year after three years of strong outperformance.
In its last year measured against a benchmark split evenly between UK and the world, the investment trust achieved the same 3.9% rise as its benchmark, but will now be measured against an undiluted world index.
"This reflects both the global nature of the portfolio and the fact that the place where a company is listed is not necessarily where it actually earns its profits," the chairman Sir Donald Mackay said.
"The benchmark is a reference point for judging performance the portfolio does not set out to reproduce the index."
The chairman said that during the sharp falls in the markets last summer and in February this year, "I was impressed that the managers maintained their positive stance towards equities during these bouts of nervousness, taking the opportunity to increase some holdings and introduce others while share prices were weak".
He said the trust had four years ago initiated an integrated global approach, choosing to ignore the make-up of the index when selecting investments.
"Over this period the share price has risen by 131.1% and net asset value per share by 126.5%, both outstripping a 77.9% increase in the benchmark."
The trust, one of the biggest in the sector with around 20,000 shareholders, had trounced the old benchmark in the previous two years under manager James Anderson, who a year ago stepped up to chief investment officer on the retirement of Richard Burns.
Anderson has narrowed down the portfolio from 129 stocks to 75, and last year the number of UK stocks was cut from 33 to 18, though the holding period averages a lengthy five years.
He says he has "added to several overseas positions - notably to domestically oriented emerging market stocks and to alternative energy stocks which were predictably, but illogically, weak in the recent turbulence".
A year ago Mackay bemoaned the widening of the discount amid lack of demand for the shares despite the fund's attractions.
Mackay said yesterday: "The managers are making considerable efforts to attract new shareholders Nevertheless, it still remains a source of great frustration to the board that the discount has not narrowed over the period and strenuous efforts to stimulate long-term demand will continue."
He added: "I see the premise as simple: over times of overall global economic growth, equity investment is likely to prove more rewarding than lending money to banks, companies or governments. Funds managed by experienced global players, such as Baillie Gifford, are likely to perform better than stock market indices The managers are devoting considerable thought and resources to the marketing of Scottish Mortgage."
The total expense ratio, which is among the lowest in the industry, fell from 0.52% to 0.48%.
The total dividend is 9.5p, up 11.8%, and Mackay says that although historically the UK market has had a higher yield than most overseas markets, "we do now expect good levels of dividend growth from our overseas holdings".
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