OverviewBaillie 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.
Meet the Trust ManagerPraveen Kumar
Praveen graduated BEng in Computer Science from Bangalore University in 2001, and has an MBA from Judge Business School, University of Cambridge. He previously worked for FKI Logistex before joining Baillie Gifford in 2008. After completing the investment graduate trainee programme Praveen joined the Japanese Equities Team as an Investment Manager in 2011. Praveen was appointed as the Portfolio Manager of Baillie Gifford Shin Nippon on 1 December 2015.
Meet our DirectorsNeil Donaldson - Chairman
Neil Donaldson was appointed a Director in 2014 and became Chairman on 21 May 2015. Mr Donaldson has been chief executive of James Donaldson & Sons Limited, an independent Fife based timber merchants, since 1985. Currently the chairman of Securities Trust of Scotland, he has served on its board since 2005 and has more than 15 years’ experience of the investment trust sector. He also holds a number of appointments with several charities.P Francis Charig - Director
Francis Charig was appointed a Director in 2005. He has considerable knowledge of the technology, information and financial sectors in Japan gained from his time amongst others, at the London Stock Exchange as Head of the TSBU, as Chairman & CEO of Tao Group and as the Chairman of the Open Contents Platform Association based in Tokyo. He was named a World Economic Forum Technology Pioneer in 2006. He is currently Chairman & CEO of sports information company, BetWiz Sports.Iain A McLaren CA - Director
Iain A McLaren was appointed a Director in 2009 and is Chairman of the Audit Committee. He has extensive experience of financial reporting, auditing, corporate governance and general management. He retired from KPMG in 2008 having been a partner for 27 years and was senior partner in Scotland from 1999 to 2004. He is currently senior independent director and chairman of the audit committee of Cairn Energy Plc. He is also chairman of Investors Capital Trust Plc, non-executive director of Edinburgh Dragon Trust plc and Ecofin Water & Power Opportunities plc and a director of a number of other companies.Simon CN Somerville - Director
Simon CN Somerville was appointed a Director in 2010. He has over 20 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 is currently co-head of Asian equities.Merryn R Somerset Webb - Director
Merryn R Somerset Webb was appointed a Director on 4 October 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, is a director of Montanaro European Smaller Companies Trust plc and a trustee of the Daiwa Anglo Japanese Foundation.
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.
ObjectiveBaillie 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 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 75 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.
On acquisition, no holding shall exceed 3% of the portfolio and any holding that as a result of good performance exceeds 5% of the portfolio 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, which invest principally in Japanese securities. On acquisition, no more than 15% of the Company’s gross assets will be invested in such companies or funds.
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.