Scottish Mortgage Trust Cuts China Exposure to 11% Over Six Years
nashnova research
Scottish Mortgage Investment Trust, the UK's largest investment trust, has halved its China exposure from 24% to 11% over six years — driven by geopolitical risk and regulatory shifts — but has not exited entirely.
How much was cut, and how fast?
China exposure stood at 24% at end-2020; it now sits at 11% — more than halved in six years.
The trust is managed by Baillie Gifford and held £17.75 billion (≈$23.55 bn) in total assets as of end-August, making it the UK's largest investment trust.
This means → at current scale, China-linked holdings are roughly £1.95 billion — still sizable, but down from nearly a quarter to just over a tenth.
Why reduce?
Fund manager Tom Slater cited two drivers: US restrictions on investment in Chinese companies and shifts in China's domestic regulatory environment.
His words: "We want to own these great companies, but we recognise there is a common risk that links them."
In plain terms = the issue is not company quality — it is that these holdings share the same geopolitical ceiling. When policy tightens, they all get squeezed at once.
Why not exit completely?
Linda Lin, Baillie Gifford's head of Chinese equities, said China is not just catching up but setting the pace in green technology, advanced manufacturing, robotics, and AI.
The trust still holds BYD, CATL, and ByteDance, spanning both new-energy and tech themes.
This reflects a real tension inside foreign institutions: manage the risk, yes — but ignoring China's industrial acceleration entirely is its own kind of risk.
What does the broader backdrop look like?
Chinese equities have lagged global peers this year; the CSI 300 index hit a one-year low this week.
Concerns over weak domestic demand and US-China tensions continue to weigh on valuations.
This means → Scottish Mortgage's drawdown is not an isolated case but a snapshot of foreign institutions growing more cautious on Chinese assets. Whether the remaining 11% shrinks further depends largely on how geopolitics evolves.
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