Baillie Gifford Shin Nippon announces fee cut as benchmark is beaten

The Edinburgh-based investment company, which has net assets of £222m, has seen a total return of 29.5 per cent over the last six months, while its share price has risen 31.6 per cent.

The performance meant it achieved a 29.5 per cent rise in net asset value during its first half, ahead of its benchmark MSCI Japan Small Cap Index which had a total return in sterling of 23 per cent.

The fee cut follows similar moves on the £422m Baillie Gifford Japan and £271.8m Edinburgh Worldwide Investment trusts, although on these the top tier in the fee structure kicks in at £250 million.

In the Shin Nippon investment trust annual management fees are calculated at 0.95 per cent on the first £50m of assets, followed by a 0.65 per cent fee for assets between £50 million and £250 million of assets.

In its interim results released today, the investment trust said that Japanese smaller companies had “held up well” over the last six months despite weakness in the broader market.

Undervalued real estate names, such as specialist condominium builder and reinforced concrete specialist Sho-Bond, were strong performers for the company.

Baillie Gifford said: “The first half of the year witnessed increased volatility across global markets. The EU referendum result, concerns over global growth and China in particular, rising scepticism over unconventional monetary policy by central banks, and speculation over the timing of a rise in US interest rates all served to heighten market uncertainty.

“Despite weakness in the broader markets, Japanese smaller companies have held up well.”

Highlighting stocks and sectors that had performed well for Shin Nippon, Baillie Gifford added: “There was a noticeable investor rotation to undervalued real estate-related names.

Takara Leben, the specialist condominium builder and Sho-Bond, which specialises in reinforcing concrete structures, were among the best performers.