Baillie Gifford Shin Nippon (BGS)

Baillie Gifford Shin Nippon (BGS) has undergone significant change following the promotion of Brian Lum to lead manager in May 2025, supported by Jared Anderson as deputy. Whilst the trust retains its focus on high-growth Japanese smaller companies, the investment process has evolved, with a more formalised investment framework in place, greater emphasis on risk management and structured approach to portfolio construction. The broader Japan investment team is also more closely integrated, supporting idea generation and stock challenge.

Changes to the Portfolio are already evident, with holdings reduced from over 70 to the mid-60s and a clear intention to move towards a more concentrated 50–60 stock portfolio over time. The investable universe has also been broadened, allowing investment in companies above ¥150bn at purchase, increasing flexibility and the opportunity set. Recent additions because of this restriction lifting include Seiko Group, JMDC and Money Forward, whilst a number of lower-conviction holdings have been exited.

Performance over the past 12 months has improved, with BGS delivering NAV and share price total returns of 22.6% and 28.8%, respectively, to 24/04/2026. This marks a step forward relative to recent years, although returns remain behind the MSCI Japan Small Cap Index. Over five years, performance has lagged the benchmark materially, reflecting both the dominance of value over growth and stock selection, with the latter influenced by the trust’s historic restriction towards the smaller end of the small-cap universe.

At the time of writing, BGS trades on a Discount of 8.7%, broadly in line with its five-year average of 8.9%. The board has introduced a range of discount control measures, including tender offers and performance-linked mechanisms, to help manage the discount.