This article is about a fund that invests in small Japanese companies. In the past year it returned about 30%, close to the market. But over five years it lost 23%, while the Japanese small-cap index gained 58%. The manager picks innovative small firms, but recently those picks have underperformed badly. For ordinary investors, the lesson is that even professional funds can lag for years. Don't judge a fund by one good year—look at long-term results. The fund also uses borrowing, which can increase losses. It's worth reading because it shows the real risks of small-cap and growth investing, even for a well-known manager.
Baillie Gifford Shin Nippon PLC is an actively managed Japanese small-cap growth trust that invests in 40–80 companies at reasonable valuations and may invest up to 10% in unlisted companies, seeking long-term capital growth. As of June 30, 2026, total assets stood at £403.57m, with the share price
For the 12 months ended June 30, 2026: NAV +30.2%, share price +31.2%, trailing the MSCI Japan Small Cap Index (+33.2%) by 3.0 and 2.0 percentage points, respectively; five-year NAV return of -22.6% versus +57.9% for the index over the same period, a clear long-term gap. The report does not provide monthly data.
| Measure | 1 Year | 3 Years | 5 Years | 10 Years |
|---|---|---|---|---|
| Fund NAV | 30.2 | 15.2 | -22.6 | 64.0 |
| Fund share price | 31.2 | 17.4 | -28.2 | 46.5 |
| MSCI Japan Small Cap Index | 33.2 | 63.2 | 57.9 | 134.9 |
Discrete performance by fiscal year:
| Year ended June 30 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|
| Fund share price | -38.3 | -0.8 | -18.0 | 9.2 | 31.2 |
| Fund NAV | -34.3 | 2.3 | -15.1 | 4.1 | 30.2 |
| MSCI Japan Small Cap Index | -10.4 | 8.0 | 7.5 | 13.9 | 33.2 |
All performance is in sterling, on a total-return basis (dividends reinvested). The most striking feature of the report: the latest year was close to the benchmark, but the three- and five-year numbers show substantial underperformance.
[Neutral/Not stated] The report offers no judgment on the direction of the market, only a restatement of the "five-year Japan small-cap growth" approach; readers should note this is the fund's self-description, not an independent market view.
The report only discloses the holdings snapshot as of June 30, 2026, with no new positions, adds, trims, or liquidations, so only the existing distribution can be shown; no buy/sell direction is indicated for any individual stock.
Top ten holdings:
| Company | % of total assets |
|---|---|
| Tsugami | 5.6% |
| Harmonic Drive Systems | 4.1% |
| JEOL | 3.7% |
| Nikkiso | 3.6% |
| Kohoku Kogyo | 3.5% |
| Toyo Tanso | 2.9% |
| Optex | 2.9% |
| SWCC Corporation | 2.6% |
| GA Technologies | 2.4% |
| Yonex | 2.3% |
The top ten total 33.6%.
Industry distribution:
| Industry | % of total assets |
|---|---|
| Industrials | 29.3% |
| Information Technology | 20.3% |
| Consumer Discretionary | 14.9% |
| Communication Services | 8.4% |
| Financials | 8.2% |
| Health Care | 7.8% |
| Real Estate | 3.2% |
| Consumer Staples | 3.1% |
| Materials | 1.7% |
| Net Liquid Assets | 3.0% |
As of June 30, 2026, total assets £403.57m, total borrowings £51.49m; NAV per share 178.02p, share price 162.40p, an 8.8% discount to NAV.