How do you generate a return of more than 200 per cent from Japanese small-caps when the index is barely making 60 per cent and the main market is tumbling? By investing in the most important companies you’ve never heard of, says Praveen Kumar, manager of Baillie Gifford Shin Nippon (BGS). He is investing in Japan’s best-kept secret – a new generation of entrepreneurs poised to take business from the nation’s biggest companies.
Mr Kumar took over management of IC Top 100 Fund Baillie Gifford Shin Nippon in December 2015, which under previous manager John MacDougall chalked up some very strong numbers: over 10 years it has returned 81.6 per cent against 31.8 per cent for MSCI Japan Small Cap Index, and over five years 212.7 per cent against 61.1 per cent for its benchmark.
Mr Kumar plans to ensure the trust continues to soar above its index and rivals by investing in small and under-researched stocks that play a crucial part in some of the most exciting areas of the global market. Headlines about Japan conjure images of a slowing, lumbering giant of an economy struggling to turn itself around despite best fiscal efforts, but he says that further down the market scale something more exciting is happening – and he has the proof.