Interactive Investor

Japan: trusts have edge over funds in medium to long term, research finds

14th July 2021 14:47

Jemma Jackson from interactive investor

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To celebrate the Tokyo Olympics, we reveal the best-performing Japanese-focused trusts and/or funds across four track disciplines: marathon (25 years); 1,500m (10 years), 800m (five years) and 100m (one-year).

With the Euros and Wimbledon out of the way, the Tokyo Olympics is the last major event in the summer sporting calendar.

With the spotlight on Japan as the Olympics approaches, research by interactive investor, the UK’s second-largest DIY investment platform, suggests that Japan-focused investment trusts have been on a winning streak over funds over the medium to long term – for now at least.

Super 60-rated Baillie Gifford Shin Nippon (LSE:BGS) investment trust in particular has turned in some impressive long-term performance versus Japan-focused peers over the long term, leaving both other investment trusts and funds trailing.

To celebrate the Tokyo Olympics due to start next Friday (23 July) - and for a bit of fun – interactive investor has pored over the numbers to reveal the best-performing Japanese-focused investment trusts and/or funds (to 8 July 2021) across four track disciplines: marathon (25 years); 1,500m (10 years), 800m (five years) and 100m (one-year).

Baillie Gifford Shin Nippon wins gold over 25 years, beating all Japan-focused investment trusts and funds, up 689%. And Baillie Gifford-managed portfolios are in first, second (another investment trust – Baillie Gifford Japan (LSE:BGFD), up 613%) and third place (Baillie Gifford Japanese fund up 519%) over this time frame.

Over 10 years, two Baillie Gifford-managed Japan investment trusts take silver and bronze, with Shin Nippon up 534% and Baillie Gifford Japan up 350%, However, gold is taken by a fund – and another interactive investor Super 60 constituent - Legg Mason IF Japan Equity, up 625%.

Over five years, two out of the top three focused Japan investment trusts and funds are investment trusts, with Baillie Gifford Shin Nippon taking silver, up 108%, and Fidelity Japan Trust (LSE:FJV) taking bronze, up 105%. But it’s a fund in first place - Goldman Sachs Japan Equity Partners Portfolio R up 118%.

Over the past year, no investment trusts take the top spots, and indeed the slower vaccination roll-out and resurgence in cases in Japan, leading to new restrictions, has had a negative impact on the Japan constituents of ii’s Super 60 rated list.

Super 60 – Japan-focused constituents suffer in short term

This is reflected in interactive investor’s recent quarterly review of its Super 60 rated list. Baillie Gifford Shin Nippon was the fifth worse-performing Super 60 constituent in quarter two 2021 (along with Lindsell Train Japanese Equity, the third worse-performing Super 60 constituent).

Quarter one 2021 was a similar story, with Shin Nippon the worst-performing Super 60 rated constituent, and Legg Mason IF Japan Equity the third worse performer and with Lindsell Train Japanese Equity the fourth-worse performing Super 60 constituent.

Dzmitry Lipski, Head of Fund Research, interactive investor, says: “The government and the BOJ have undertaken extensive monetary and fiscal easing to address the effects of the Covid-19 pandemic, but a slow vaccination roll-out has hampered these efforts, with the ban on fans for the 23 July Olympics, just one symbol of this.

“Despite challenges faced by the economy, the Japanese equity market still offers plenty of opportunities for investors, with some world-class businesses that still look like great value – but patience is very much required.”

Top-performing funds and trusts in Japan sectors (% total return)

Marathon – performance over 25 years

Fund/investment trust

Performance over 25 years (%)

Gold

Baillie Gifford Shin Nippon Ord (investment trust)

688.65

Silver

Baillie Gifford Japan Ord (investment trust)

612.92

Bronze

Baillie Gifford Japanese B Acc (fund)

519.25

1,500 Meters - 10 Years

Fund/investment trust

Performance over 10 Years (%)

Gold

Legg Mason IF Japan Equity X Acc (fund)

624.69

Silver

Baillie Gifford Shin Nippon Ord (investment trust)

533.59

Bronze

Baillie Gifford Japan Ord (investment trust)

349.70

800 Meters - 5 Years

Fund/investment trust

Performance over five Years (%)

Gold

Goldman Sachs Japan Equity Partners Portfolio R (fund)

117.84

Silver

Baillie Gifford Shin Nippon Ord (investment trust)

107.51

Bronze

Fidelity Japan Trust Ord (investment trust)

104.90

100 Meters - 1 Year

Fund/investment trust

Performance over one Year (%)

Gold

M&G Japan Smaller Companies GBP I Acc (fund)

43.34

Silver

Lazard Japanese Strategic Equity Fund (fund)

37.04

Bronze

Liontrust Japan Opportunities C Acc GBP (fund)

28.35

Performance data as at 8 July 2021. Source: interactive investor using Morningstar. Past performance is no guide to the future. Investments, and the income from them, can go down as well as up and you may not get back the full amount invested.

Notes to editors

Five-year discrete returns for funds and investment trusts in tables of press release – ii using Morningstar

  09/07/2020 - 08/07/2021 09/07/2019 - 08/07/2020 09/07/2018 - 08/07/2019 09/07/2017 - 08/07/2018 09/07/2016 - 08/07/2017
Baillie Gifford Shin Nippon Ord 19.09 7.17 0.57 40.51 15.06
Baillie Gifford Japan Ord 23.9 3.86 1.17 25.15 23.75
Baillie Gifford Japanese B Acc 16.65 2.15 5 14.92 28.76
Legg Mason IF Japan Equity X Acc 12.34 16.84 1.75 32.04 -5.96
Goldman Sachs Japan Equity Partners Portfolio R 22.39 18.43 -0.25 17.43 28.3
Fidelity Japan Trust Ord 23.96 17.69 -3.31 28.52 13.02
M&G Japan Smaller Companies GBP I Acc 43.34 -5.1 -6.42 2.4 34.24
Lazard Japanese Strategic Equity Fund 37.04 -0.07 -7.1 2.44 57.04
Liontrust Japan Opportunities C Acc GBP 28.35 -5.35 -9.12 4.5 47.76

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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