Baillie Gifford Shin Nippon (BGS) is a small-cap Japanese equity strategy, giving investors access to rapidly growing companies. Lead by Praveen Kumar, BGS’s strategy is to take a highly active, long-term view to bottom-up investing. This involves identifying companies which are able to either disrupt incumbent industries or offer solutions to many of the problems facing Japan, with many of BGS’s investments being held for over a decade. While the investment process is flexible, as we outline in the Portfolio section, the team places the greatest weight on management quality and sales growth, with investments ideally returning at least 100% over five years. The team’s strategy has clearly been successful, given BGS’s sector-leading performance. Over the last five years the strategy has generated returns that easily outperform both its benchmark and peers, as we detail in the Performance section. 2020 was also an exceptionally strong year for the trust thanks to the tailwinds from COVID-19, with six of its holdings generating returns of over 100% during the year. While there have clearly been near-term headwinds for BGS thanks to the vaccine recovery-led rotation into value stocks, the trust’s portfolio is overwhelmingly driven by stock-specific risk, with Praveen commenting that his companies ‘live or die’ on the decisions of their management. Perhaps thanks to its market-leading return, BGS’s shares have traded at a premium to NAV for the majority of the last five years, and the premium is currently 2.7%. BGS also has the lowest OCF in the sector, thanks to its tiered management fee structure and large market cap. Being a total-return-focussed strategy, BGS does not pay a dividend.