I think Scottish Mortgage Investment Trust is a FTSE 100 bargain so I’m buying

This FTSE 100-listed trust is trading at a discount. I’d snap up shares here for big long-term profits, says Tom Rodgers.

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The Scottish Mortgage Investment Trust (LSE:SMT) is now available at a large discount and in my view is a great buying opportunity. The shares are on offer at a price 2.3% below the net asset value of the companies it holds. 

This FTSE 100 investment trust offers a different prospect to buying individual company shares. Adding SMT to your portfolio means you get exposure to some of the world’s best technology stocks.

These include Amazon, Tesla and Spotify. Also in the mix is Dutch semiconductor giant ASML. It manufacturers computer chips that power millions of devices worldwide for the likes of Intel and Samsung.

It means you can own a slice of the the world’s fastest-growing shares in your Stocks and Shares ISA or SIPP. All this without having to go through the hassle of filling out reams of paperwork dealing with significant additional charges.

Growing in strength

Since I last covered SMT in October 2019, the value of stocks and shares owned by the fund has grown from £7.7bn to £9bn.

Baillie Gifford operates SMT and is one of the world’s biggest asset managers. Joint fund managers James Anderson and Tom Slater don’t just pick big companies and hold them forever. These are no overpaid operators creaming off millions in fees with one eye on the exit. They have proved in recent years that they will drop stocks if they’re underperforming.

Video star

For example, Anderson and Slater sold their holdings of NASDAQ-listed Baidu last year. They assessed the online search giant and saw it being overtaken by WeChat. Digging further, they found that its billionaire chief executive Robin Li turned down a chance to get into short-form video.

This might not sound like much. But Li’s refusal to see the writing on the wall meant the astonishing rise of ByteDance, which owns video sharing app TikTok. If you have children you will probably have heard of this platform.

TikTok is now challenging Facebook for dominance in the video space and according to TechCrunch has over 800 million daily users while its revenue increased 300% in Q4 2019.

Not public but profitable

SMT is able to own a slice of ByteDance even though its shares are not publicly listed on any stock exchange. In fact, 21% of the portfolio is made up of companies whose shares aren’t available to retail investors. And yet there’s no need to miss out. We can still grab a slice of the rapid growth of tech unicorns by investing in SMT.

You’ll pay ongoing charges of 0.37% per year, which in my view is very cheap. Most of all, the investment trust is a low-cost, low-effort entry point for investors who want to diversify worldwide.

While fears about the spread of coronavirus mean the share prices of 87 of the 100 largest UK companies have fallen recently, this market plunge has shone a spotlight on some great opportunities. Follow Warren Buffett’s advice: keep your cool and “be greedy when others are fearful” and I suggest you’ll find significant long-term profits.

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

Tom Rodgers owns shares in Scottish Mortgage Investment Trust. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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