Baillie Gifford Shin Nippon

Japanese Equities

Rated Fund 2015-20. Backs the next generation of companies and entrepreneurs

The stablemate to Baillie Gifford Japan, Baillie Gifford Shin Nippon, clinched a hat trick in 2019, when it was named Money Observer’s Best Japan Trust for the third consecutive year. FundCalibre, the fund ratings and research provider, rates this an ‘Elite’ fund and points to its pedigree as the best-performing Japanese fund, both closed- and open-ended, since Shinzo Abe came to power. It has turned £1,000 into £4,650 during his tenure.

Its main differentiator is that it focuses exclusively on high-growth smaller companies. Shin Nippon means ‘new Japan’ and Praveen Kumar, the trust’s manager since the end of 2015, backs 40 to 80 companies in emerging and disruptive sectors, often run by younger, more progressive management than is typical in Japan. Kumar pays little attention to the benchmark, as demonstrated by an ‘active share’ (percentage difference from the benchmark index) of 94%. Although many of Japan’s corporate giants are well known to foreign investors, its smaller companies receive scant investment research coverage, so this part of the market is where some of the strongest gains can be made.

Smaller companies are typically higher-risk, though, making this trust suitable for those who are very optimistic about the outlook for Japanese equities. One such investor is Skerritts Wealth Management. Investment manager Charlie Lloyd says: “We retain conviction in Japan, despite recent volatility. This trust invests in small and mid-caps, so is very much a play on domestic themes in Japan.”

In spring 2018 Shin Nippon was trading on a premium of 14%, but that has since disappeared, contributing to weaker share price performance over 2019. The shares traded at close to net asset value at the end of the year.

Narrative and rating as of January 2020.

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Name
Baillie Gifford Shin Nippon
Manager
Baillie Gifford & Co Limited.
Type
Closed Ended Investment Company
ISIN
GB00BFXYH242
Sector
Japanese Smaller Companies
Launched
31/07/1985
OCF
0.76 %
Risk Rating
5
3 Year Sharpe
0.20
3 Year Alpha
4.90
Yield
0 %
Benchmark
MSCI Japan Small Cap GR USD
Fund Size
£ 385.26 million
NAV
137
Gearing
112
Discount Premium
-5
Aims to achieve long-term capital growth principally through investment in small Japanese companies which are believed to have above average prospects for growth.
Holding %
Nihon M&A Center Inc 3.18 %
Bengo4.com Inc 3.17 %
Infomart Corp 2.95 %
MonotaRO Co Ltd 2.95 %
OUTSOURCING Inc 2.93 %
Horiba Ltd 2.82 %
Katitas Co Ltd 2.64 %
PeptiDream Inc 2.50 %
M3 Inc 2.48 %
GMO Payment Gateway Inc 2.43 %
Region %
Japan 100.00 %
Sector %
Industrials 30.87 %
Technology 25.46 %
Healthcare 14.08 %
Consumer Cyclical 11.37 %
Financial Services 5.78 %
Name
Baillie Gifford & Co Limited.
Address
EH1 3AN, Edinburgh, United Kingdom
UCITS
No
Legal Structure
Closed Ended Investment Company

Managers

Praveen Kumar
Joined 11/30/2015

Praveen Kumar joined Baillie Gifford in 2008 and became an investment manager on the Japanese Equities team in 2011. He graduated BEng in Computer Science from Bangalore University in 2001, and has an MBA in Finance from Cambridge University in 2008. He previously worked for FKI Logistex before joining Baillie Gifford in 2008.

Data provided by Morningstar.

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