Baillie Gifford Japanese investment trust’s 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 the high ‘active share’ the trust has. 

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 on the outlook for Japanese equities.

October 2020