adviser only
Face to face with Andy Dunn, product specialist, Baillie Gifford Japanese
Meeting summary This was a one-to-one, in-person update with Andy Dunn, who talked through Baillie...
Baillie Gifford Japanese Fund
One of the oldest Japan funds in the sector, Baillie Gifford Japanese Fund has delivered outstanding returns in the most difficult market conditions. The fund is managed by a large team, based in Edinburgh, and invests in growing Japanese businesses that deliver consistently strong returns to shareholders.
Our opinion
Baillie Gifford Japanese fund has a very strong Japanese equity team. This is a well-managed portfolio with a clear investment strategy, which offers complementary exposure to those funds that are focused more on the value of a company rather than its growth prospects. Baillie Gifford Japanese Fund has been one of the most consistent funds in its sector and has proven itself in many different market environments.
Company description
Founded in 1908 and employee-owned, Baillie Gifford is based in Edinburgh but has offices in London and New York. Awarded the Elite Provider for Equities Rating each year from 2015 to 2021, it specialises globally in equities, fixed income and multi-asset portfolios. The firm is owned by 44 of its senior executives and operates as a partnership.
Fund manager
The investment manager of the Baillie Gifford Japanese fund is Matthew Brett. Having co-managed the fund since November 2007, he took the lead role in May 2018. Matthew joined the company in 2003 after achieving a BA in Natural Sciences from the University of Cambridge and a PhD in Psychology from Bristol University. Matthew has the support of the Japanese equities team which is responsible for researching companies and generating new ideas.
We are growth-orientated, stock-picking managers.
Matthew BrettFund manager
Investment process
Baillie Gifford Japanese fund seeks to invest in well-managed businesses with a strong competitive advantage that are not overpriced. The research process is designed to ensure the best ideas of each individual team member are included in the portfolio. It is built around five specific factors: a company’s competitive advantage, industry, financial strength, how well it is run and its valuation. These are discussed amongst the team with Matthew having the final say on what is added to the portfolio. Being growth investors, the team have a natural bias towards medium-sized companies.
ESG
ESG - Limited
With this fund, Matthew takes a long-term approach, looking for growth opportunities with firms that are likely to be future leaders. He believes that this long-term approach incorporates a natural bias towards sustainable business models, however this is not a formal policy of the philosophy or process. Material ESG issues that are identified in the analysis will be considered as possible reasons to not invest, but this will be on a case-by-case basis, rather than a systematic approach. There is a strong focus on governance though, with Matthew and the team having regular engagement with the management of companies already held in the fund and those of prospective holdings.
Risk
Investing in Japan can be volatile, although its stock market movements are often less correlated to developed equity markets, so can act as a diversifier. The emphasis on structural change within the portfolio should benefit from the government’s current economic strategy. The process seeks out growth-orientated companies, which can underperform should this style of investing fall out of favour.
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