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Baillie Gifford Shin Nippon PLC on Tuesday reported a rise in net asset value and increased its dividend, though it continued to underperform its benchmark amid challenges in Japanese small-cap growth stocks. The investment trust said net asset value per share rose to 146.3 pence at January 31 from 139.4p a year prior, while net asset value total return was 5.4% over the year. Share price total return was stronger at 14.4%. The company increased its final dividend to 0.69p per share from 0.60p, reflecting a higher revenue return of 0.77p per share, up from 0.67p. However, performance lagged its benchmark, the MSCI Japan Small Cap Index, which returned 21.5% over the same period. Over five years, performance has been weaker, with net asset value per share down 36.1% and the share price down 43.8%, compared to a 42.4% rise in the benchmark. The trust said investing in high-growth, domestically focused Japanese small-cap companies has remained challenging, with the sector out of favour amid rising interest rates, a weak yen and a shift towards value stocks, exporters and artificial intelligence-linked large-cap names. Despite this, the board said it continues to see long-term opportunity in the segment, describing it as ‘one of the most overlooked areas of global equity markets’, with valuations near decade lows. The trust also continued to address its share price discount, which narrowed to 7.5% from 14.6% a year earlier, supported by buybacks of 34.2 million shares during the period. Looking ahead, the company said underlying conditions remain difficult but believes structural changes in Japan, including labour shortages and increased adoption of digitalisation and automation, could support long-term growth in smaller companies. Baillie Gifford Shin Nippon shares were down 1.1% at 131.99 pence in London on Tuesday afternoon. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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