BAILLIE Gifford Shin Nippon achieved a 29.5 per cent rise in net asset value during its first half, ahead of its benchmark index, as the investment trust’s stakes in property and construction and internet-focused holdings performed strongly.
During the six months to July 31, the benchmark MSCI Japan Small Cap Index recorded a total return of 23 per cent in sterling terms.
Edinburgh-based Baillie Gifford noted sterling-based investors in the trust had benefited from a stronger yen.
Baillie Gifford said: “The first half of the year witnessed increased volatility across global markets. The EU referendum result in the UK, concerns over global growth and China in particular, rising scepticism over unconventional monetary policy by central banks, and speculation over the timing of a rise in US interest rates all served to heighten market uncertainty. Despite weakness in the broader markets, Japanese smaller companies have held up well.”
Highlighting stocks and sectors that had performed well for Shin Nippon, which had net assets of £222 million at July 31, Baillie Gifford said: “There was a noticeable investor rotation to undervalued real estate-related names. Takara Leben, the specialist condominium builder and Sho-Bond, which specialises in reinforcing concrete structures, were strong performers.
“Amongst the other strongest performers in the portfolio were several...long-term internet-related holdings.”
Baillie Gifford said Shin Nippon holdings Start Today, which operates an online apparel marketplace, MonotaRO, which runs a website that sells millions of maintenance and repair-related items required by small businesses on a daily basis, and M3, which provides online marketing support for pharmaceutical companies, all continued to grow rapidly.
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