Baillie Gifford Shin Nippon grows 10%

Niche Japanese smaller companies trust Baillie Gifford Shin Nippon has seen its portfolio swell by nearly 10% as rising demand in Japan's consumer, healthcare and industrial sectors ramped up returns.

The £55 million investment company tore past its benchmark by around 3% during the first six months of the year, with its net asset value (NAV) per share climbing 9.7% while the MSCI Small Caps Index increased 6% in sterling times.

The group highlighted what they believe are extremely attractive valuations among Japanese small cap stocks. Baillie Gifford Shin Nippon is trading at the wide end of its 6 month range – 15% versus a high of 2%.

‘During the six month period, it was encouraging to note improved performance from long-term holdings in the healthcare sector which was somewhat out of favour last year,’ Baillie Gifford said in its statement to the stockmarket.

EPS, which provides outsourced drug research and M3, a direct marketing website for doctors, both performed ‘impressively’ between January and 31 July, the group said.

In the discretionary consumer arena one of last year’s top performers Start Today – the online fashion retailer – continued its strong run and benefited from a rise in internet shopping for luxuries by Japanese consumers.

Elsewhere, the trust’s positions in industrials were among its top performers, with hydraulic joint maker Nabtesco leading the charge.

‘Given the current concerns about global growth this might be a surprise to some.  However Nabtesco's fortunes are tied to demand from long term infrastructure and factory automation projects in China and other developing markets, rather than the weaker demand environment in Europe or the US,’ Baillie Gifford said.

Looking forward, Baillie Gifford’s Shin Nippon, which trades on a 15.3% discount, aims to deliver continued robust performance through new holdings in the Japanese property sector.

It took a new position in TokyoReit, a real estate vehicle investing in offices and commercial properties.