Baillie Gifford Japan (BGFD) severely underperformed in its half-year results to 28 February with a 4.4% underlying total investment return compared to the 22.4% advance in the TOPIX index. Shareholders saw a 6.1% total return as the shares narrowed the gap, or discount, to net asset value (NAV) from 11.4% to 10.1%. Sam Davis, the new chair of the £628m investment trust, said it was “disappointing” after fund manager Matthew Brett oversaw a 20.5% increase in NAV in the previous financial year to 31 August, which had suggested a return to favour of growth investing in Japan. “Needless to say, performance remains the board’s foremost priority and we will continue to challenge the manager on the strategy and its implementation,” he said. The largest detractors from BGFD’s performance were CyberAgent, GMO Internet Group, Rakuten, SBI Holdings and GA Technologies. “The manager remains positive on their long-term prospects, noting improving profitability, restructuring initiatives and the opportunity presented by AI adoption,” he said.
James Carthew, head of investment company research at QuotedData, said: “The so-called ‘SaaSpocalypse’ that hit many software and data-driven businesses earlier this year appears to have taken its toll on Baillie Gifford Japan too. The trust’s interim figures were very disappointing, and its returns are a long way behind peers over all time periods. The derating of many of the stocks in the portfolio does mean that valuations are more attractive, but Japan’s persistent inflation and rising interest rates may be a headwind to the strategy.”
JPMorgan Emerging Markets Dividend Income (JEMI) has posted strong half-year results with a 20.2% total underlying investment return for the six months to 31 January that beat the MSCI Emerging Markets’ 19.3% advance in sterling. Shareholders’ total return was 25.6% as the share price discount to net asset value (NAV) narrowed. This extends the five-year NAV total return to 52.7% underpinning 55% shareholder return compared with 29.8% for the benchmark. Samsung Electronics (South Korea), ASE Technology (Taiwan), Axia Energia (Brazil), and portfolio over-weights in financials, consumer discretionary and consumer staples contributed to the half-year returns. Under its new dividend policy, the company intends to pay at least 6p per share in dividends this year with quarterly payments of 1.5p (two declared already and a third intended), up from 5.6p in the previous financial year.
QuotedData’s James Carthew said: “I am a happy holder of JPMorgan Emerging Markets Dividend Income, which has turned out another decent set of results. Since the period end, many emerging markets have been knocked by the energy price shock triggered by Trump’s attack on Iran. However, I agree with chair Elisabeth Scott when she says that the structural benefits of emerging markets and the capital discipline associated with dividend paying companies underpins the long term outlook for the trust.”
Merchants (MRCH) thanks Simon Gergel of Allianz Global Investors for the “enormous value” he has generated running the £866m UK equity income trust for 20 years. Annual results show the year to 31 January was challenging though as its 18.9% underlying return trailed the 21.1% rebound in the FTSE All-Share index. However, a final 7.5p dividend lifts the total annual pay-out from the 5%-yielder to 29.5p per share, up 1.4% for a 44th consecutive year of growth, covered by 30.6p earnings per share up from 29.4p.
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