AI and tariffs ‘reordering’ investment decisions – Daily Business

Manager of leading investment trust Tom Slater has said artificial intelligence and Donald Trump’s tariffs are influencing and “reordering” the investment landscape.

Mr Slater, who leads the Scottish Mortgage Investment Trust, said its strategy was shifting to meet the demands of an “environment defined by unpredictability.

Commenting after the trust announced annual results, he said: “Few developments this year were more consequential than the rise of generative AI. The conversation has moved quickly from theory to practice.

“We see its impact most clearly in software engineering, where productivity is already rising dramatically. This matters because software sits at the core of the modern economy, and many of our companies are already putting these gains to work.

“Several have increased output without increasing engineering headcount. Others have launched new products with surprisingly lean teams. AI is not a distant promise. It is driving real operational leverage today.”

He said commoditisation of AI had led the trust to cut its holding in chip maker Nvidia and add to companies that will benefit from the broader adoption of AI tools.

“In an environment defined by unpredictability, resilience is not a secondary virtue; it is central to long-term success,” said Mr Slater., “We are increasingly convinced that the companies most likely to endure and thrive are those capable of adapting. This means not just those with strong balance sheets, but with leadership teams willing to evolve, reallocate capital, and make difficult decisions without losing sight of their long-term mission.

“This year brought a fresh reminder of how interconnected, and vulnerable, the global system has become. Just after our financial year end, the United States announced sweeping new tariffs on several of its key trading partners.

“The reaction from markets was immediate and severe. We are cautious about leaping to conclusions, but we do not view these developments as transitory. The underlying imbalances in the US and global economy whether in trade, debt accumulation, inequality or political cohesion are increasingly unsustainable. As Herbert Stein’s Law famously states, “If something cannot go on forever, it will stop.” It appears the current administration is accelerating that moment of reckoning.

“Equity markets offer no hiding places in such a landscape. Few companies will be unaffected by a reordering of the global trading regime. What matters is how they respond. Our task as investors is to seek out businesses with the adaptability to recalibrate and the cultural foundations to withstand disruption. In this context, resilience becomes not just about enduring shocks but learning from them and emerging stronger.

After serving on the board for 10 years, Justin Rowley will retire at the Annual General Meeting and will be succeeded by Christopher Samuel, an experienced chairman and non executive director. 

The trust reported a share price and net asset value (NAV) return of 6% and 11.2%, respectively, ahead of the FTSE All-World Index 5.5% return.

Amid volatile markets, the share price discount to NAV widened from 4.5% to 9%, roughly in line with the investment trust sector average of 9.1%.

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