**Summary**
The Baillie Gifford Japan Trust PLCs half-year financial report for the six months ending February 28, 2026, highlights a net asset value (NAV) total return of 4.4% and a share price total return of 6.1%. Despite positive absolute returns, the trust underperformed the TOPIX benchmark, which returned 22.4% in sterling terms. The underperformance was primarily due to several large growth holdings, including CyberAgent, GMO Internet Group, Rakuten, SBI Holdings, and GA Technologies, which detracted from relative performance despite showing operational progress. Sumitomo Metal Mining was the largest contributor to performance.
The trust made new investments in high-growth opportunities like Yaskawa Electric and Harmonic Drive, increasing exposure to the "physical AI" theme. Share buybacks totaling 2,925,000 shares (3.8% of issued capital) were NAV accretive by 0.4%. The share price outperformed NAV, narrowing the discount from 11.4% to 10.1%.
The Chairs statement emphasized Japans investment attractions, including its stable economy, deep equity market, technological leadership, and improving corporate governance. However, the trusts performance has been disappointing, with significant underperformance in the first half of the current year, offsetting previous gains. The Board remains focused on challenging the investment strategy and process to improve long-term shareholder value.
The Interim Management Report detailed the operational progress of underperforming holdings and the potential of AI as an opportunity rather than a threat. The trusts portfolio exhibited strong sales growth and is positioned for better earnings growth, trading at a discount to the market. The report concluded with optimism about Japans economic stability and the trusts high-quality holdings, despite recent underperformance.
| Metric | 28 February 2026 | 31 August 2025 | Change |
|---|---|---|---|
| Net Asset Value (NAV) per Share (book) | 1,051.9p | 1,017.1p | +3.4% |
| Share Price | 946.0p | 901.0p | +5.0% |
| Discount to NAV | (10.1%) | (11.4%) | Narrowed by 1.3% |
| Total Assets | £891.5m | £898.6m | -0.8% |
| Borrowings (Total) | £107.192m | £115.947m | -7.6% |
| Net Gearing | 12.5% | 12.8% | -0.3% |
| Gross Gearing | 13.7% | 14.7% | -1.0% |
| NAV Total Return per Share | 4.4% | 20.5% | -16.1% |
| Share Price Total Return | 6.1% | N/A | N/A |
| TOPIX Total Return (in sterling terms) | 22.4% | N/A | N/A |
| Shares Bought Back | 2,925,000 | 6,395,000 | -54.3% |