Manager's Report
Sarah Whitley - Trust Manager
Sarah graduated BA in Experimental Psychology from Oxford University in 1980 and joined Baillie Gifford the same year. She quickly specialised in Japan and has worked in the department since 1982 and became Head of the Team in 2001. Sarah became a partner of the firm in 1986 and her main areas of responsibility are in Investment Policy and Strategy.
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The net asset value fell by 4.0%* compared with a 4.5%* fall in Topix, in sterling terms. After the recent period of strength the yen weakened a little from the middle of the month.
The Japanese political situation has continued to be unhelpful for sentiment, including an unfilled vacancy for a central bank governor, and there are increasing global concerns about the impact of problems in credit markets on the real economy.
The Topix dividend yield now exceeds the 10 year Japanese government bond yield, which is a very odd situation given that we expect solid dividend growth over the next few years and there is still good scope for Japanese payout ratios to increase. Although we do not predict short-term market moves, we are enthused about the longer-term given the number of attractive stock-picking opportunities that are available at present.
During the month we took a new holding in Keihin (specialist in carburettors and fuel injection systems) which were trading at a very attractive valuation.
* Source - Fundamental Data Ltd, no income
Investment markets and conditions can change rapidly and the views expressed by our Managers should not be relied upon when making investment decisions. Remember, past performance is not a guide to future performance. The value of your investment may go down as well as up and you may not get back the amount you invested. Also, as the Trust invests in overseas securities changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.
