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Baillie Gifford Japanese B

Japanese fund investing in quality growth companies with a large and mid-cap bias.

  • 1717.00p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • 1990.00p
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.60%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.61%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 1.00%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 20 January 2022, fund commentary last updated 12 October 2021

This fund aims to provide long-term capital growth by investing in mainly large Japanese companies which have better than average growth prospects. Lead manager Matthew Brett selects stocks based on bottom-up factors such as attractive industry backgrounds, earnings growth and return on capital. Brett and his team, and Baillie Gifford generally, invest with a growth-orientated style and typically hold companies for the long term. Holdings include SoftBank Group, electronics giant Sony and Super Mario computer games group Nintendo.

Fund summary

Sector Japan
Structure OEIC
Launched August, 1999
Size £3,822m
Yield 1.00%
Charging basis Income
Dividends paid 30 Jun

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.60%
Ongoing charges figure 0.61%

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Investment process

The fund has a team-based approach led by Matthew Brett. They use a bottom-up, growth orientated style to create a portfolio of 45-60 holdings which are categorised into secular growth, growth stalwarts, special situations and cyclical growth. The focus is on growth companies that satisfy more than one of their preliminary requirements: positive industry background, competitive advantage, favourable attitudes towards shareholders and strong financials. Their screening creates a “followed” list of around 350 companies which they analyse further to identify true growth companies and avoid those that are cheap for a reason. In addition to in-house research, they also use independent researchers based in Tokyo to investigate any issues and feed back ideas from trade shows. At Baillie Gifford, they benefit from all investment teams being situated together in Edinburgh as they promote a cross-team sharing ethos which enhances analysis of companies and their rivals and their positions within an industry. The Japanese team has around 500 company meetings with a member of the team visiting Japan biannually. They have developed a questioning strategy they call their ‘Kenshiki’ approach which ensures they cover key characteristics of Japanese stocks such as whether a company controls its distribution, how aware they are of shareholders interests, how much cash they keep on their balance sheet and their attitude to investing for growth. They tend to hold companies for 3-5 years, with a low annual turnover rate typically 25%. They continually monitor their holdings for changes in their four preliminary factors, which triggers a reassessment and sell.

Matthew Brett took over management of the fund in 2018 following the retirement of long-time leader Sarah Whitley. Whilst that could have been a setback, Brett had been working alongside Whitley for over 10 years and is supported by a wider team of nine investment managers with 15 years average experience. The fund benefits from having a disciplined philosophy and process focussed on quality growth companies. They know exactly the type of companies they want to invest in. There is volatility risk, with the potential for large relative drawdowns if sentiment turns against the team’s favoured companies. But Brett takes a patient approach, ignoring short-term sentiment and keeping faith with the intrinsic value of his holdings. It is this truly long-term approach which differentiates the team’s strategy from their peers, and which has helped the fund produce attractive returns over time.

Manager research

Average monthly relative returns

  • 17/18 0.43%
  • 18/19 0.38%
  • 19/20 0.00%
  • 20/21 0.42%
  • 21/22 -0.16%

Bestinvest MRI

  • 3 years 0.09%
  • 5 years 0.21%
  • Career 0.26%
  • 3 years 69.20%
  • 5 years 93.50%
  • Career 99.90%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Matthew Brett

Brett joined Baillie Gifford in 2003 and is an Investment Manager in the Japanese Equity Team. He became co-manager of the Baillie Gifford Japanese fund in 2008 and lead manager of the Japanese fund and the Baillie Gifford Japan IT in 2018. He also manages the Baillie Gifford Japanese Income Growth fund which he launched in 2016. He graduated from the University of Cambridge with a BA (Hons) in Natural Sciences (Psychology) in 2000. He holds a PhD in Psychology from Bristol University and is a CFA Charterholder.

Track record

Matthew Brett has 13.8 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.26%. During the worst period of relative performance (from June 2019 - March 2020) there was a decline of 9% relative to the index. The worst absolute loss has been 18%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.

Periods of worst performance

Absolute -18.00% (May 2008 - February 2009)
Relative -9.00% (June 2019 - March 2020)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Top 10 holdings

Data accurate as at 30 November 2021

4.8% Softbank Group Corp
4.2% Rakuten Group Inc
3.6% Sbi Hldgs Inc
3.6% Misumi Group Inc
3.3% Kubota Corp
3.3% Sony Group Corp
3.2% Denso Corp
3.1% Gmo Internet Inc
3% Sumitomo Mitsui Tr Hldgs Inc
2.7% Fanuc Corp
Source: Trustnet

Sector breakdown

Machinery 22.00%
Services 20.00%
Electronic & Electrical Equipment 17.00%
Financials 12.00%
Telecommunications Utilities 12.00%
Chemicals 9.00%
Pharmaceuticals 4.00%
Real Estate & Construction 3.00%
Money Market 1.00%
Retail 1.00%

Portfolio

45 to 65 holdings.

Constraints

The maximum position size is 10%.

Key Investor Information - Income

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Key Investor Information - Accumulation

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