Capital at risk

Investment strategy

Japan Smaller Companies

Japan’s inefficiencies offer unbounded upside potential for its new breed of entrepreneurial companies. We aim to capture these opportunities. Each holding is selected for its long-term growth potential.  

Landscape view of Mount Fuji at night with a starlit sky.

Backing businesses, not the economy

By focusing on the fundamentals, we aim to uncover Japan’s mispriced and often under-appreciated opportunities. Our first-hand experience of Japan’s rich history offers us strong insight into the significant structural changes at play here. 

Japanese Equities Q4 investment update

Investment manager Karen See and investment specialist Sarah Clark give an update on the Japan All Cap, Japan Growth and Japan Income Growth strategies covering Q4 2023.

Pursuing growth in all forms

Japan Smaller Companies is distinctly long-term. We aim to capture asymmetrical equity market returns by investing in Japan’s most promising small-cap stocks. 

Our portfolio contains 40-80 holdings from range of sectors and industries, each held for its own long-term idiosyncratic growth prospects.  

We find these companies through bottom-up research; holding on for the long term in a bid to capture the full benefits of compounded growth in all its forms – from secular opportunities in emerging digital disruptors; to the enduring growth of stalwart franchises; to special situations of corporate reform. 

Embracing the entrepreneurial

We aim to capture Japan’s outlier growth opportunities; businesses that are breaking the mould, embracing an entrepreneurial and experimental mindset, and attacking the profit pools of less efficient incumbents.  

The patience with which we pursue these growth businesses is a product of our pedigree. Having launched specialist mandates in the 1980s, we’re one of the few who’ve been doing this for over 40 years. 

Though the uncovered and undiscovered nature of Japanese small cap investing often comes with significant short-term volatility, it also presents the prospect of outsized long-term upside.
Praveen Kumar

Meet the manager

Documents

Philosophy and process

Explore our investment philosophy and the processes around how the team constructs the portfolio.

Quarterly update

Get the latest investment commentary, portfolio overview, transactions and performance information alongside governance engagement and voting. 

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Strategy portfolio holdings

A list of the top 10 holdings that the representative portfolio invests in.

All figures up to: 31 January 2024

#Holding% of portfolio
1Cosmos Pharmaceutical3.4%
2Asahi Intecc2.9%
3GMO Financial Gate2.6%
4Megachips2.5%
5Lifenet Insurance2.5%
6WealthNavi2.4%
7Nifco2.3%
8Sho-Bond Holdings2.3%
9Toyo Tanso2.2%
10LITALICO2.1%

Strategy holdings by sector

All figures up to: 31 January 2024

1Industrials26.30%
2Information Technology17.40%
3Consumer Discretionary14.00%
4Financials12.80%
5Health Care8.40%
6Consumer Staples8.10%
7Communication Services7.70%
8Materials3.10%
9Real Estate1.80%
10Cash0.50%
Total 100%

Strategy holdings by sector

All figures up to: 31 January 2024

Total: 100%

Please note

The information contained on this page is intended as a guide only and should not be relied upon when making investment decisions. All holdings information is unaudited. Source Baillie Gifford & Co. Please note that totals may not add due to rounding.

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Important information

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