OverviewThe value of investments and any income from them may go down as well as up and you or your client may not get back the amount originally invested.
Baillie Gifford Shin Nippon aims to achieve long-term capital growth principally through investment in small Japanese companies which are believed to have above average prospects for capital growth.
About the Trust
Baillie Gifford Shin Nippon PLC was launched in July 1985 in order to capitalise on the investment opportunity available among companies too small and illiquid for Baillie Gifford Japan Trust PLC, which had been launched successfully four years before. Shin Nippon, which means New Japan, has as its objective the pursuit of long-term capital growth principally through investment in small Japanese companies which are believed to have above average prospects for capital growth.
There are several reasons why we believe the Japanese small capitalisation universe can be considered a particularly attractive asset class. First, many of the most interesting emerging service sectors in Japan, which are growing fast owing to corporate outsourcing and government deregulation, such as temporary labour provision and nursing care, consist entirely of small companies. Second, in certain sectors such as retail and finance the companies with the best niche positions, growth prospects and management teams tend to be small. Third, broker coverage of these stocks can be minimal, giving our Japanese team substantial potential to add value against the market through in-house research.
The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies. The value of their shares, and any income from them, can fall as well as rise and investors may not get back the amount invested.
Baillie Gifford Shin Nippon is an investment company within the meaning of section 833 of the Companies Act 2006. Registered in Scotland. Registered number: SC93345. Registered office: Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN.
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Meet the Trust ManagerPraveen Kumar
Praveen joined Baillie Gifford in 2008 and is an Investment Manager in the Japanese Equities Team. He previously worked for FKI Logistex. Praveen graduated BEng in Computer Science from Bangalore University in 2001 and gained an MBA from the University of Cambridge in 2008.
Meet our DirectorsNeil Donaldson
Neil Donaldson was appointed a Director in 2014 and became Chairman in 2015. Mr Donaldson has been chairman of James Donaldson & Sons Limited, an independent Fife based timber merchants, since 1985. He is also deputy chairman of the R&A general committee. Formerly the chairman of Securities Trust of Scotland, he served on its board from 2005 until 2017 and has more than 17 years’ experience of the investment trust sector. He also holds appointments with several charities.Merryn Somerset Webb
Merryn Somerset Webb was appointed a Director in 2011. She is the editor-in-chief of UK personal finance magazine MoneyWeek, writes for the Financial Times and is a radio and television commentator on financial matters. She has a strong interest in and knowledge of Japan and is a non-executive director of Montanaro European Smaller Companies Trust plc and Murray Income Trust PLC. She is also a trustee of The Super Power Agency.Simon Somerville
Simon Somerville was appointed a Director in 2010. He has over 27 years’ experience in Japanese and Asian equities. Having worked for over 14 years at Cazenove Fund Management, latterly as the head of Global Equities, he joined Jupiter Asset Management in 2005 where he was Strategy Head of Japan Equities. He is currently Portfolio Manager with responsibility for Japan at Marathon Asset Management.Professor Sethu Vijayakumar
Professor Vijayakumar is the Professor of Robotics at the University of Edinburgh and the Director of the Edinburgh Centre for Robotics. He is a world renowned roboticist, known for his scientific contribution to the data driven control of several iconic robotic platforms with his latest project involving a collaboration with the NASA Johnson Space Centre on the Valkyrie humanoid robot being prepared for unmanned robotic pre-deployment missions to Mars. He is a Fellow of the Royal Society of Edinburgh, a judge on BBC Robot Wars and winner of the 2015 Tam Dalyell Prize for excellence in engaging the public with science. Sethu has strong ties with Japan having spent seven years in Tokyo during his PhD and postdoctoral training, still closely collaborates with several R&D firms and multinationals on translational research projects and is a fluent Japanese speaker.Jamie Skinner
Jamie Skinner was appointed a Director in 2018. Jamie is a qualified accountant and a fellow of the Chartered Institute for Securities and Investment. He joined Cazenove & Co in 1989 as a corporate finance executive working principally on investment companies and also other sector IPO activity, and in 1995 he was appointed Managing Director of the Johannesburg office. In 1999 he joined Martin Currie Investment Management Limited as a director and in 2014 was appointed Head of Client Services. He served as President and CEO of The China Fund, Inc. until 2012, President and CEO of The Taiwan Fund, Inc. until 2014 and President of the Martin Currie Business Trust until 2015. He also served on the boards of Martin Currie, Inc. and the Martin Currie Japan Absolute Return Fund up to his retirement from Martin Currie on 31 July 2018. Jamie is a non-executive director of Ediston Property Investment Company plc and the Asian Opportunities Absolute Return Fund Limited and Audit Chair of the Ashoka India Equity Trust plc.Kevin Troup
Kevin qualified as a Chartered Accountant in 1993 with Coopers & Lybrand. He started his Japanese investment career with Scottish Life in 1995 later becoming Head of Japan. In 2000 he joined Martin Currie Investment Management managing Japanese Smaller Companies. In 2004 he launched two Japanese Funds, a Mid-Cap Fund and was co-manager at launch for the Daijiro Absolute Return Fund responsible for picking small cap positions.
Kevin joined the Global team at Standard Life Investments in 2010 launching a new Global Equity Income product and with responsibility for Japanese investments within a Global franchise. He retired in 2018 and is now a non-executive Director at Baring Fund Managers Limited and at TPI Fund Managers Limited. He is also on the Investment Committee at The National Trust for Scotland and on the board of The Royal Caledonian Curling Club.
In general, for the small companies that Shin Nippon invests in, we believe that the quality of management teams and their business strategies have more influence rather than macroeconomic factors.
Baillie Gifford Shin Nippon’s objective is to pursue long term capital growth through investment principally in small Japanese companies which are believed to have above average prospects for growth. The Board and Managers currently consider a small company to be one that has either market capitalisation or turnover of less than ¥150 billion. The Company is classified by the AIC within its Japanese Smaller Companies sector.
The portfolio is constructed through the identification of individual companies which offer long term growth potential, typically over a three to five-year horizon. The portfolio is actively managed and does not seek to track the comparative index, hence a degree of volatility against the index is inevitable.
In constructing the equity portfolio a spread of risk is achieved by diversifying the portfolio through investment in 40 to 80 holdings. Although sector concentration and the thematic characteristics of the portfolio are carefully monitored, there are no maximum limits to deviation from comparative index stock or sector weights.
Holdings are limited to 5% of total assets at time of purchase. Any holding that, as a result of performance, exceeds 5% of total assets is subject to particular scrutiny. A holding greater than 5% will continue to be held where the Managers are convinced of the ongoing merits of the investment case.
The Company may invest in UK and Overseas domiciled pooled funds, including UK listed investment trusts, that invest principally in Japanese securities. On acquisition, no more than 15% of the Company’s total assets will be invested in such companies or funds.
The portfolio is expected to consist of predominantly listed equity holdings, however unlisted investments may also be held. Holdings of unlisted investments shall not exceed 10% of the total assets of the Company in aggregate at the time of purchase.
From time to time, fixed interest holdings, or non equity investments, may be held on an opportunistic basis. The Company may use derivatives which will be principally, but not exclusively, for the purpose of efficient portfolio management (i.e. for the purpose of reducing, transferring or eliminating investment risk in its investments, including protection against currency risks).
The Company recognises the long term advantages of gearing. Although the Company may have maximum equity gearing of 50% of shareholders’ funds, the Board would seek to have a maximum equity gearing level of 30% of shareholders’ funds at the time of drawdown.
Borrowings are typically invested in securities when it is considered that investment grounds merit the Company taking a geared position to securities. Gearing levels, and the extent of equity gearing, are discussed by the Board and Managers at every Board meeting. The Managers are tasked with ensuring that gearing is managed efficiently and within the parameters set by the Board and any loan covenants.