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At the beginning of 2024, I invested a few thousand pounds in Scottish Mortgage Investment Trust (LSE: SMT). It was a good decision: as I write this just before Christmas, Scottish Mortgage's share price is up 17% so far this year, up from a 4% gain last year. FTSE 100 index (I'm not taking dividends into account here).
Can this growth-focused investment trust beat the Footsie again in 2025? I think so. Here's why.
hot topics
The reason Scottish Mortgage shares have performed well in 2024 is that the investment trust offers exposure to companies that are in growth industries. I'm talking about industries like artificial intelligence (ai), cloud computing, online shopping, space exploration, and computer chips.
I expect these industries to continue growing next year (which should be good for Scottish Mortgage). In most cases, these industries are projected to grow 10% or more per year through 2030.
One industry I am particularly excited about is ai. Right now, we are seeing the second phase of this technology, where companies are implementing artificial intelligence solutions that improve their products and drive revenue growth.
Some companies in Scottish Mortgage's portfolio that could do well in this phase include amazon, buyand Metaplatforms (which are all among the top 10 holdings). All of these companies are very active in the ai space and are introducing features into their product portfolios.
<h2 class="wp-block-heading" id="h-growth-stocks“>Growth stocks
Now, many stocks in the portfolio have performed well this year. For example, NVIDIAwhich is currently a top 10 holding, is up 170% so far this year.
I see many stocks owned by Scottish Mortgage with profit potential also in 2025. One is amazon. It has underperformed other Big tech stocks in recent years and is now playing catch-up. With strong earnings growth, I think it could do well next year, although there are no guarantees of course.
Another stock that could do well next year is ASML. It specializes in sophisticated equipment needed to make ai chips. There is some uncertainty here due to export restrictions. But if orders are strong, I think the stock could do well.
Overall, I see a lot of stocks with potential for 2025. If they do well, Scottish Mortgage's share price should rise.
anything can happen
Of course, anything can happen in the stock market in the short term. Scottish Mortgage shares may therefore not outperform the FTSE 100.
One factor that could cause weak performance is some profit taking in technology stocks. They have had a great run in the last two years so they could see a decline.
Another is interest rates. If they rose, valuations of unlisted companies could be affected.
Alternatively, the FTSE 100 could have a purple patch. It hasn't done much in the last five years, so it could burst and beat the investment trust.
However, my money is on the Scottish Mortgage Investment Trust to beat the Footsie. I look forward to another year of great profits.
