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 underappreciated opportunities. Our first-hand experience of Japan’s rich history offers us strong insight into the significant structural changes at play here. 

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

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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: 30 April 2024

#Holding% of portfolio
1Toyo Tanso3.6%
2Lifenet Insurance3.2%
3Cosmos Pharmaceutical3.0%
4Nifco2.8%
5KATITAS2.3%
6SIIX2.3%
7Nakanishi2.3%
8WealthNavi2.3%
9OSG2.1%
10LITALICO2.1%

Strategy holdings by sector

All figures up to: 30 April 2024

1Industrials28.90%
2Information Technology16.90%
3Consumer Discretionary13.10%
4Financials12.40%
5Communication Services8.40%
6Health Care8.20%
7Consumer Staples6.90%
8Materials2.80%
9Real Estate2.30%
10Cash0.00%
Total 100%

Strategy holdings by sector

All figures up to: 30 April 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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Insights

Key articles, videos and podcasts relating to the strategy:

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Insights

Viewing 20 of 20
  1. The landscape seen from lens in Shanghai, China

    China through a Japanese lens

    Japanese tech dominance is under increasing pressure in China from domestic challengers.
    May 2024
    Article8 minutes
  2. The fresh face of Japanese finance

    New online services are transforming Japanese financial habits.
    March 2024
    Article4 minutes
  3. Japan Stewardship Report

    For the year ended September 2023.
    February 2024
    Document
  4. Why growth, why now?

    Tough times play to the partnership’s strengths: analysing what enables us to adapt and thrive amid rapid change.
    December 2023
    Article17 minutes
  5. Spotting the stars amid a surge

    Rising Japanese markets are flattering old-style companies: better to look for long-term growth.
    November 2023
    Document
  6. Japan’s new growth opportunities

    Seeking the entrepreneurial firms that could sustain the country’s rally.
    November 2023
    Article
  7. Japan’s place in the chip market

    The Japanese semiconductor companies set to benefit from the rise of 5G and electric cars.
    March 2023
    Article
  8. Why small is big in Japan

    Praveen Kumar on the lesser-known players thriving in the shadow of the country’s big brands.
    February 2023
    Podcast21 minutes
  9. Japan Stewardship Report 2022

    For the year ended September 2022.
    December 2022
    Document
  10. Success after succession

    How can founder-defined companies – from Nidec to Nintendo – ensure success when it’s time for a new CEO?
    June 2022
    Article
  11. The strengths of Japanese company culture

    Companies such as Mercari that know that trying new things is the secret to growth.
    March 2022
    Article
  12. Sysmex’s quest to diagnose disease

    Kobe medical diagnostics company is well-placed to capitalise on therapy breakthroughs.
    January 2022
    Article
  13. Four decades of lessons

    Japan’s ability to anticipate technological change should see it through the ups and downs to come.
    December 2021
    Article
  14. The return of the durable winners

    Japan’s big brands are back, thanks to Chinese consumers, digitisation and better governance.
    September 2021
    Article
  15. How Japan weathered Covid

    The resilience of the Japanese economy still managed to deliver dividends despite the pandemic.
    September 2021
    Article
  16. Adapting to disrupt

    In Japan as elsewhere, companies that can adapt quickly often have the most success.
    September 2021
    Article
  17. SBI: Japan’s fintech frontrunner

    How an entrepreneurial tech company disrupted the world of Japanese financial services.
    September 2021
    Article
  18. Japan Smaller Companies: the winners

    The effects of Covid-19 were felt very differently across the smaller companies landscape.
    September 2021
    Article
  19. Interview with our Japanese researchers

    Donald Farquharson, head of the Japanese Equity Team at Baillie Gifford, speaks to Japan-based strategy researchers Akiko Hirai and Satoko Ishino.
    March 2021
    Video15 minutes
  20. Dominators vs disrupters - the future of industrial robotics

    The big four incumbents in robotics are gearing up for a challenge. In a reshaping global industry, they are readying themselves for the march of the cobots.
    Document

China through a Japanese lens

Japanese tech dominance is under increasing pressure in China from domestic challengers.
May 2024
Article

  1. The landscape seen from lens in Shanghai, China

    China through a Japanese lens

    Japanese tech dominance is under increasing pressure in China from domestic challengers.
    May 2024
    Article
  2. The fresh face of Japanese finance

    New online services are transforming Japanese financial habits.
    March 2024
    Article4 minutes
  3. Japan Stewardship Report

    For the year ended September 2023.
    February 2024
    Document
  4. Why growth, why now?

    Tough times play to the partnership’s strengths: analysing what enables us to adapt and thrive amid rapid change.
    December 2023
    Article17 minutes
  5. Spotting the stars amid a surge

    Rising Japanese markets are flattering old-style companies: better to look for long-term growth.
    November 2023
    Document
  6. Japan’s new growth opportunities

    Seeking the entrepreneurial firms that could sustain the country’s rally.
    November 2023
    Article
  7. Japan’s place in the chip market

    The Japanese semiconductor companies set to benefit from the rise of 5G and electric cars.
    March 2023
    Article
  8. Why small is big in Japan

    Praveen Kumar on the lesser-known players thriving in the shadow of the country’s big brands.
    February 2023
    Podcast21 minutes
  9. Japan Stewardship Report 2022

    For the year ended September 2022.
    December 2022
    Document
  10. Success after succession

    How can founder-defined companies – from Nidec to Nintendo – ensure success when it’s time for a new CEO?
    June 2022
    Article
  11. The strengths of Japanese company culture

    Companies such as Mercari that know that trying new things is the secret to growth.
    March 2022
    Article
  12. Sysmex’s quest to diagnose disease

    Kobe medical diagnostics company is well-placed to capitalise on therapy breakthroughs.
    January 2022
    Article
  13. Four decades of lessons

    Japan’s ability to anticipate technological change should see it through the ups and downs to come.
    December 2021
    Article
  14. The return of the durable winners

    Japan’s big brands are back, thanks to Chinese consumers, digitisation and better governance.
    September 2021
    Article
  15. How Japan weathered Covid

    The resilience of the Japanese economy still managed to deliver dividends despite the pandemic.
    September 2021
    Article
  16. Adapting to disrupt

    In Japan as elsewhere, companies that can adapt quickly often have the most success.
    September 2021
    Article
  17. SBI: Japan’s fintech frontrunner

    How an entrepreneurial tech company disrupted the world of Japanese financial services.
    September 2021
    Article
  18. Japan Smaller Companies: the winners

    The effects of Covid-19 were felt very differently across the smaller companies landscape.
    September 2021
    Article
  19. Interview with our Japanese researchers

    Donald Farquharson, head of the Japanese Equity Team at Baillie Gifford, speaks to Japan-based strategy researchers Akiko Hirai and Satoko Ishino.
    March 2021
    Video15 minutes
  20. Dominators vs disrupters - the future of industrial robotics

    The big four incumbents in robotics are gearing up for a challenge. In a reshaping global industry, they are readying themselves for the march of the cobots.
    Document

Explore further

Curious to learn more about our products and what we can offer you? Please get in touch.