Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error

BG Shin Nippon vs BG Japan Smaller Companies
Road-Man
Posted: 18 April 2018 21:35:51(UTC)
#1

Joined: 12/04/2016(UTC)
Posts: 9

Thanks: 17 times
Since BGS is currently around 10% premium, I was looking for an alternative as I do not like to buy IT's on a premium. The Bailie Gifford Japan Smaller Compaines fund appears very similar, however the performance adavantage in BGS has opened up a bit in recent months.

Returns from the March factsheets;
Japanese Smaller Companies 35.4% - 1Year, 101.3% - 3Year, 185.4% - 5Year
BGS 43.9% - 1Year, 162.4% - 3Year, 254.8% - 5Year.

Other than gearing is there any fundamental differences between the fund and IT that I'm missing?

I bought BGFD around 2% premium compared to about 6% for BGS in Jan 2017. However BGS is up 52% compared to 36% for BGFD since then!

I tend to look for bargins, but comming around to thinking that I should buy quality, like Terry Smith and Warren Buffett advocates..

What the thoughts?
Tom Bards
Posted: 18 April 2018 21:53:13(UTC)
#2

Joined: 28/06/2017(UTC)
Posts: 96

Was thanked: 110 time(s) in 61 post(s)
Only difference is Shin Nippon has higher charges. The difference in performance is probably down to gearing but obviously that comes at a cost and more risk.

I own BG Japanese Smaller Companies myself as I don't like the premium on Shin Nippon. They do have slightly different holdings but my impression was that BG Japanese Smaller Companies is basically supposed to be the fund version of Shin Nippon.

Baillie Gifford do this a lot, same thing with SMT vs. BG Long Term Global Growth and Edinburgh Worldwide vs. Global Discovery.
3 users thanked Tom Bards for this post.
Road-Man on 19/04/2018(UTC), mcminvest on 19/04/2018(UTC), dlp6666 on 20/04/2018(UTC)
Laughton
Posted: 20 April 2018 14:35:59(UTC)
#3

Joined: 22/12/2011(UTC)
Posts: 7

Was thanked: 5 time(s) in 2 post(s)
Bear in mind that many platforms charge more for holding Until Trusts than they do for Investment Trusts.

(Declaration - I hold Shin Nipon)
Tom Bards
Posted: 20 April 2018 15:16:02(UTC)
#4

Joined: 28/06/2017(UTC)
Posts: 96

Was thanked: 110 time(s) in 61 post(s)
Laughton;60947 wrote:
Bear in mind that many platforms charge more for holding Until Trusts than they do for Investment Trusts.

(Declaration - I hold Shin Nipon)



Also bear in mind that Investment Trusts are typically more expensive regardless of platform charge.

Shin Nippon is around 1.5% without a platform charge included

BG Japanese Smaller Companies is around 0.85% without a platform charge included.


As far as I know on any platform, BG Japanese Smaller Companies will always come out cheaper, regardless of platform charge. Even on HL with one of the most expensive platform charges for Unit Trusts it's still cheaper to hold it over Shin Nippon.
1 user thanked Tom Bards for this post.
Road-Man on 22/04/2018(UTC)
Gordon Russell
Posted: 20 April 2018 15:51:09(UTC)
#5

Joined: 09/12/2012(UTC)
Posts: 18

Thanks: 1 times
Was thanked: 23 time(s) in 13 post(s)
I also held the IT on and off for years and made spectacular gains , but it is higher risk because of the gearing and the high premium . When markets turn south ITs on high premiums get savaged . A few years ago I went through such a negative period and saw heavy losses on Shin Nippon .

I then ran a performance graph on both the Fund and the IT and at the time there was not much difference between the two , with the IT probably just outperforming . This was maybe 5 years ago and as you say recent performance has favored the IT probably bcz the premium has increased and / or the gearing has increased . I don’t know .

So I am now a contented owner of the Fund . It is performing well and has a lower risk profile than the IT . There is another reason why I am in the Fund . Funds are exempt from Inheritance Tax in the UK and for me the GBP 325,000 limit exposes me to IHT on equities and ITs that I hold above this limit . So I need to be in quite a few funds to avoid IHT .

If this IHT issue which affects my own personal situation , and probably not everyone’s , I would probably favour the outperforming IT but I would never be a long term buy and holder because of the risk and higher volatility .

Don’t make decisions based on a lowly volatile 2017 when lots of ITs traded on rising premiums .
1 user thanked Gordon Russell for this post.
David Harmes on 30/04/2018(UTC)
King Lodos
Posted: 20 April 2018 15:52:03(UTC)
#7

Joined: 05/01/2016(UTC)
Posts: 2,934

Thanks: 672 times
Was thanked: 4526 time(s) in 1753 post(s)
Road-Man;60855 wrote:
I tend to look for bargins, but comming around to thinking that I should buy quality, like Terry Smith and Warren Buffett advocates..

What the thoughts?


Japanese Small Caps have been the momentum trade for a while .. But it's a fairly specific play on the Japanese domestic economy.

Momentum's one of the things I use a lot – but you have to be careful, when you get into a momentum trade, that you're not buying late into the trade, and you're not the 'greater fool' left holding on when everyone decides to bank huge profits and get out .. It's very easy to find yourself behind the curve when you buy into optimism/euphoria/strength .. And the difference is selling .. You can happily buy into a trade in the last 8th of the move, so long as you sell when it turns .. Far easier said than done – I don't think there's a magic rule; I think it really comes from having a feel for market sentiment.

My preferred way to play this one is the more Buffett/Smith approach – with Lindsell Train Japan and Global .. They've caught a lot of the upside momentum, but I think they'd be good companies to hold onto even if the Japanese trade turns next week .. Nintendo's been on a huge run, and there's a lot riding on their cardboard Switch peripheries for their run to continue – I think that's a real unknown .. Which is how I feel about the Japanese trade in general – it will turn at some point
3 users thanked King Lodos for this post.
Tim D on 20/04/2018(UTC), Guest on 20/04/2018(UTC), Road-Man on 22/04/2018(UTC)
Guest
Posted: 20 April 2018 16:10:04(UTC)
#6

Joined: 20/04/2018(UTC)
Posts: 1

[q Funds are exempt from Inheritance Tax in the UK and for me the GBP 325,000 limit exposes me to IHT on equities and ITs that I hold above this limit .

I didn't know this. It seems most unfair if true.

Do you have a source link to show this .ie HMRC link?

Neal Hattersley
Gordon Russell
Posted: 20 April 2018 17:00:53(UTC)
#8

Joined: 09/12/2012(UTC)
Posts: 18

Thanks: 1 times
Was thanked: 23 time(s) in 13 post(s)
This a reply to Guests query on IHT

Can’t remember where I got it so you’ll just have to google and get the document which is about 10 pages long .

Check the section on exemptions .
Sara G
Posted: 20 April 2018 17:15:11(UTC)
#9

Joined: 07/05/2015(UTC)
Posts: 636

Thanks: 1175 times
Was thanked: 1193 time(s) in 436 post(s)
Gordon Russell;60960 wrote:
This a reply to Guests query on IHT

Can’t remember where I got it so you’ll just have to google and get the document which is about 10 pages long .

Check the section on exemptions .


I think this only applies if the beneficiary is resident outside of the UK:

https://www.taxworld.co....rusts-explanatory-notes/
Gordon Russell
Posted: 20 April 2018 19:53:32(UTC)
#10

Joined: 09/12/2012(UTC)
Posts: 18

Thanks: 1 times
Was thanked: 23 time(s) in 13 post(s)
Replying to Sara G

I am non resident yes , but I honestly don’t think that is the relevant point .

There is a section in the IHT tax rules which refers to exceptions that are not subject to IHT , and that is where you have to check . Unfortunately I am travelling with little time available to respond properly by referring to the Tax Rules document .

The document you provided is for trustees of a trust to avoid IHT by moving into Funds . Fair enough . But that’s not what I am referring to .

If it’s only for non residents it will state it clearly in the Act under exceptions .
1 user thanked Gordon Russell for this post.
Sara G on 20/04/2018(UTC)
Tim D
Posted: 20 April 2018 20:17:06(UTC)
#11

Joined: 07/06/2017(UTC)
Posts: 438

Thanks: 1614 times
Was thanked: 661 time(s) in 289 post(s)
Anyone (anyone in normal circumstances anyway) who thinks they can avoid IHT by simply parking their wealth in vanilla OEICs instead of ITs or stocks is... well I was going to write "in for a nasty surprise", but they'll be dead and it'll be their inheritors gnashing their teeth at paying 40% or whatever and wishing the deceased had done some more useful inheritance planning which actually had an impact.

There *is* some funny stuff about "excluded property" and OEICs, but it applies to "non-domiciled" people only. See here for example.

Or maybe there's actually some confusion here with VCTs and business property relief (BPR), which can be another IHT avoiding measure.

That's my (weak) understanding anyway; be very interested to learn different.
Split Cap Jim
Posted: 20 April 2018 21:10:53(UTC)
#12

Joined: 30/04/2016(UTC)
Posts: 13

Was thanked: 15 time(s) in 8 post(s)

Re inheritance Tax

https://www.gov.uk/hmrc-...ance-tax-manual/ihtm180

This link certainly implies Unit Trusts & OIECS are no different from ITs with regard to inheritance tax.

In all my years of reading the personal finance sections of newspapers and magazines, I don't think I've ever seen the suggestion that ordinary funds/oiecs are exempt from IHT.
Tim D
Posted: 20 April 2018 21:21:38(UTC)
#13

Joined: 07/06/2017(UTC)
Posts: 438

Thanks: 1614 times
Was thanked: 661 time(s) in 289 post(s)
Split Cap Jim;60987 wrote:


Seems to be a broken link.
Gordon Russell
Posted: 21 April 2018 02:01:47(UTC)
#14

Joined: 09/12/2012(UTC)
Posts: 18

Thanks: 1 times
Was thanked: 23 time(s) in 13 post(s)
The Inheritance Tax Conundrum - I found the correct reference now and it clearly states

1. If you are non resident in the UK then

2 . Holdings in Unit Trust Funds and OEICS will be fully exempt from UK IHT tax .

I said in my very first post that I am non resident but I didn’t think the residency was a key factor , but it’s been a while since I checked all this . Now I know that you have to be a non resident to be exempt from UK IHT taxes on hunt trust Funds .

So if you are non resident like me you construct a portfolio up to GBP 325,000 in Shares , ITs , ETFs and for amounts above that buy Funds . For a married couple they can have twice the limit namely GBP 650,000 in listed equity holdings tax free and above the limit buy only Funds .
1 user thanked Gordon Russell for this post.
Tim D on 21/04/2018(UTC)
laang lee
Posted: 21 April 2018 09:03:22(UTC)
#15

Joined: 29/11/2017(UTC)
Posts: 43

Thanks: 176 times
Was thanked: 29 time(s) in 17 post(s)
Having read Frenchman96 Help me chose last fund please, philip gosling @ #36 mentions Japan Trust, and management changes. Take a look.
I had a look on the HL site to compare performance graphs of the BG Funds and Trusts.
Gordon Russell #5 has a longer term perspective, but the recent change-round in Japanese performance has been over the past 5 years. This is where Shin Nippon has been exceptional.

Those with a longer perspective have seen the rise and fall of Japanese stocks, but the past few years have seen a good rise. Over the years the various Japanese govt.s have thrown billions into various ideas. The recent QE could explain part of the turnaround.

I typed Japan Trust into the little box on this site, and what came up was quite interesting. Nothing I read on BG Japan Trust. But one of the articles was Citywire Money "Worried about expensive shares - so are these big bears." Dated 2014. ( regular readers will recognize Tony Peterson's name in the comments.) There were a lot of articles like that at the time, and I have not looked to see how the Cautious mentioned funds have compared.

But I did recently compare my Cautious Managed fund with SMT - worth a look at a graph.
I have a small holding in SMT, but not enough to show much profit. (see below)
As to this post, and Help me chose my last fund please, I hold BGS, BG Smaller fund, Atlantis Jap Trust and Edin. Worldwide.

As I had some top up before the April deadline money - I did what KL says so many do, and invested just at the wrong time ,topping up BGS Atlantis Jap and Edinburg WW, + SMT. before April.

They were doing So well - before the end of January, and I wiped out my profits. Timing. And Time will tell.
Dexi
Posted: 21 April 2018 09:06:00(UTC)
#16

Joined: 03/04/2018(UTC)
Posts: 5

Thanks: 5 times
Was thanked: 1 time(s) in 1 post(s)
Never heard of this before - very interesting,if its really true.
David Diprose
Posted: 21 April 2018 13:39:56(UTC)
#17

Joined: 20/05/2014(UTC)
Posts: 2

Thanks: 1 times
Was thanked: 2 time(s) in 2 post(s)
On a direct comparison, BGS beats the BGFD over the last year ( 49% to 33%) - easy to compare on HL. Given the state of the market, I actually give more weight to recent performance than longer term, which makes me a momentum investor. Also, I have no hesitation in selling everything if I think the market is going to crash. Hence I sold BGS at 975 before Trump bombed Syria and bought again at 937. That style may not work for everybody but it works for me. I have a 'best investment' in each sector that I watch continuously and at the moment, I cannot see anything better than BGS. Japan has its political problems, so I am not complacent, but the recent commitment to talks by North and South Korea should be worth something. A bolder man than I would probably buy into South Korea.
1 user thanked David Diprose for this post.
Road-Man on 22/04/2018(UTC)
Steve U
Posted: 22 April 2018 08:16:38(UTC)
#18

Joined: 30/08/2017(UTC)
Posts: 22

Thanks: 35 times
Was thanked: 9 time(s) in 6 post(s)
David Diprose;61014 wrote:
On a direct comparison, BGS beats the BGFD over the last year ( 49% to 33%) - easy to compare on HL. Given the state of the market, I actually give more weight to recent performance than longer term, which makes me a momentum investor. Also, I have no hesitation in selling everything if I think the market is going to crash. Hence I sold BGS at 975 before Trump bombed Syria and bought again at 937. That style may not work for everybody but it works for me. I have a 'best investment' in each sector that I watch continuously and at the moment, I cannot see anything better than BGS. Japan has its political problems, so I am not complacent, but the recent commitment to talks by North and South Korea should be worth something. A bolder man than I would probably buy into South Korea.



are we all talking about the same thing here.


Isn't BGFD an investment trust and different to the BG Japanese Smaller Cos fund with a different manager ?
laang lee
Posted: 22 April 2018 17:03:39(UTC)
#19

Joined: 29/11/2017(UTC)
Posts: 43

Thanks: 176 times
Was thanked: 29 time(s) in 17 post(s)
With ref. to original post. What, if any, is the difference between a Fund and a Trust.?

And taking OP figures, the difference is £1,600. over that time period. For £10,000.
BGS up 52% BGFD up 36%. (say invest £10000) that gives you the £1600 difference.
Less costs. All sorts of different costs. But, Shin Nippon comes out on Top. Even though the various expenses really do add up on this IT or that Fund or whatever platform, over 5yrs 10yrs 20yrs.
OK, so " 10" years ago someone lost a packet on Shin Nippon - compare that to any other Jap. fund/IT at the same time.

Or to go with David Diprose £4900 v £3300. (coincidentally - £1600.) [49% v 33%.]

I don't think this can answer the "Better have the Fund or the Trust" question.
Because all this shows is - Shin Nippon has been exceptional over the past 5 years.

In my earlier post, I wanted readers to have a look at possible management changes.

BG Japan Trust invests in different companies and different sector weightings to BGS.
More mid -cap and poss. some large-cap.

But do BGS managers change. ? This is the question.? Do they manage both.?

My ref to a 2014 article on citywire, was to show that it could have been written yesterday.
That sort of article put me off investing until I saw the upturn. I bought Premium Bonds. ( Paying about 2%.) But I missed a lot of the gains in the stockmarket. upturn when it came.
My thoughts were, "they were talking about overpriced stocks in 2014."

The 3rd part of my previous post, referred to how I made a very good profit on a few small investments in 2017. But then, with the ISA deadline looming, I miss-read Top- of the market signals - invested more, and lost my earlier gains. This is only April, by June I hope to be in profit again.

Had I sold in January, I would have had money in the bank. But I would have to reinvest it at some point, and with these V shaped bounces, I hope to be better off holding on in there.

Good luck to David Diprose, I may well have sold at 975, but whether I would have bought back at 937.... is another question - ( I doubt I would have.)

1 user thanked laang lee for this post.
Road-Man on 25/04/2018(UTC)
+ Reply to discussion

Markets

Other markets