At less than £7, are Scottish Mortgage shares no-brainer buys?

In the last month, Mortgage Scotland (LSE: SMT) shares nosedived by another 8% to less than £7 per share. That fall sent the stock price down 55% from its all-time high.

This is a sharp decline for the company which manages almost £10bn of assets and is regarded as one of the world’s leading money managers. At less than £7, is it a no-brainer purchase?

Past performance is stellar

Between 2011 and 2021, the technology-heavy investment fund Scottish Mortgage returned the best investors 1,200%. I’d love to make 12 times that money in the next decade, that’s for sure.

And that doesn’t even do justice to the long-term performance of the fund. If I had invested in the same US in technology S&P 500 between 1993 and 2021, I have enjoyed a return of 871%. But if I put the money into Scottish Mortgage Shares instead, I’ve got a return of 3.328% times the investment.

With one of the best track records in the business, what led me to acquire some shares at a share price of £7? Well, a couple of things.

Worse than index funds?

Studies have shown that 85% of investment funds do not provide investors with market-beating returns. This means that in general, I’m better off investing in a market tracker compared to a fund like Scottish Mortgage.

The main reason the figure goes up to 85% is because investment funds charge fees for managing each fund, picking stocks and more. A 2% fee is typical, but that’s 2% of the cash return I’ll get from my investment.

The advantage of Scottish Mortgage is that the fees charged are only 0.32%. However, that’s the extra amount I’d pay to pick my own stock.

The second problem is that the performance of tech stocks has been very good for decades, but I am a little wary that people have bought into this trend. It’s a problem because of the high prices of some technology companies.

Tesla is a good example. It has a market cap of $615bn – the size of the next six largest car manufacturers – despite only having a 12% EV market share. Car manufacturers make up more than 5% of Scotland Mortgage’s portfolio.

Despite these issues, there is one final and important advantage with this stock that tips the scales in my favor.

Global exposure

The best thing about Scottish Mortgage for me is the exposure to foreign companies that I don’t know much about.

For example, a Dutch semiconductor manufacturer ASML or ‘Amazon Latin America’ Free market an unknown amount to me. But I could have some exposure to that company and others if I had some shares in Scottish Mortgage.

The idea of ​​having analysts do the research for me appealed to me. Throw in a stellar track record and a cheap £7 share price? That makes buying funds a no-brainer for me, and that’s why I opened a position last week.