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Baillie Gifford Japan Trust 

What it does: Baillie Gifford Japan Trust focuses on achieving long-term capital growth primarily by investing in smaller to medium-sized Japanese companies. 

By Mark Tovey. I plan to buy shares in Baillie Gifford Japan Trust (LSE:BGFD). That’s because the Bank of Japan, after 20 years of keeping interest rates at zero, is expected to change direction as a new governor takes charge in April. That should cause the yen to strengthen against other currencies, giving Japanese consumers more purchasing power. 

The yen has already begun to stage a comeback, rising 16% this year above its low of 2022.  

Of course, a stronger yen could throw cold water over the profitability of some Japanese exporters, like Canon and Toyota. 

But I’m not too worried about that risk, because Japanese companies have increasingly outsourced production overseas in the last two decades. While 15% of manufacturers made their products abroad at the turn of the millennium, that number has now almost doubled to 25%.  

In short, the yen could be about to stage a bull run, raising up Japanese consumers and producers that have outsourced operations.  

Mark Tovey does not own shares in Baillie Gifford Japan Trust, Toyota or Canon.  

CT European Select

What it does: CT European Select Fund invests in European stocks. Its aim is to achieve above-average capital growth.  

By Edward Sheldon, CFA. Europe is home to some world-class companies and I see the CT European Select Fund as a good way to get exposure.

There are a number of things I like about this particular fund. One is that it has a focus on higher quality companies that have the potential to grow their profits steadily year on year.

Another is the performance track record. Over the last five years, this fund has returned about 50%. That’s a very respectable performance and a much higher return than the FTSE 100 has generated.

Finally, I like the fact that fees through Hargreaves Lansdown are just 0.65% per year. That’s quite low for an actively managed fund.

One risk to be aware of is that the fund is relatively concentrated. This means that stock-specific risk is higher than average.

Overall, however, I think this fund has a lot of appeal.

Edward Sheldon has positions in the CT European Select Fund and Hargreaves Lansdown.

iShares Gold Producers UCITS ETF  

What it does: iShares Gold Producers UCITS ETF gives investors exposure to a wide range of gold mining companies.

By Royston Wild. Gold’s recent burst back above $2,000 per ounce suggests now could be a good time to gain exposure to the safe-haven metal. Further gains could be in store with this critical technical level taken out, and macroeconomic and geopolitical uncertainty dragging on. 

One way individuals can do this is by investing in the iShares Gold Producers UCITS ETF (LSE:SPGP). This exchange-traded fund has more than $1.7bn locked up in around 60 gold mining companies. 

The fund is highly geared towards Canadian-domiciled businesses, though it also has large holdings in Australian, US and South African miners. Some of its key holdings include Barrick Gold, Newmont and Franco-Nevada. 

The beauty of investing in this ETF is that, unlike ones that simply track the gold price, this particular investment vehicle pays dividends. These are then automatically reinvested back into the fund at no extra cost. 

Royston Wild does not have a position in iShares Gold Producers UCITS ETF, Barrick Gold, Newmont or Franco-Nevada.

LF Blue Whale Growth Fund

What it does: LF Blue Whale Growth Fund invests in stocks that have the ability to grow and improve profitability over the long term.

By Paul Summers: ‘Growth’ is something of a dirty word right now. With interest rates still climbing, many investors are focusing on the short term and buying shares in more established (but not necessarily good) companies. I’m inclined to do the opposite.

The LF Blue Whale Growth Fund invests in a concentrated portfolio of high-quality, blue-chip stocks that have solid futures. We’re talking about those with valuations over £100bn, not market tiddlers. 

According to its latest fact sheet, the fund has delivered just over 10% annualised since its launch in 2017. Although past performance is no guide to the future (and fees need to be taken into account), that’s higher than the 7.9% average achieved across similar funds. It’s also after a period of poor performance, likely due to almost half the portfolio being invested in tech companies.

When sentiment reverses (and I’m very confident it will), I want to be ready.

Paul Summers has positions in LF Blue Whale Growth Fund.

The L&G Cyber Security ETF

What it does: The L&G Cyber Security ETF tracks a basket of companies active in the cybersecurity industry.

By Ben McPoland.Hardly a week goes by without another major hacking incident. And it’s likely to get worse, as cybercrime is expected to cost the world around $10.5trn annually by 2025. This means cybersecurity is becoming an absolute necessity for all companies, organisations and governments.

I think L&G Cyber Security ETF (LSE:ISPY) is an excellent vehicle to ride this long-term megatrend. This exchange-traded fund (ETF) from Legal & General contains 43 stocks. The top holdings are Palo Alto Networks, Cloudflare and Fortinet.

Cybersecurity threats are constantly changing as the technologies that hackers use get ever more sophisticated. And artificial intelligence is set to up the ante in this never-ending game of cat and mouse. This fund provides broad exposure to the whole industry.

I should note that it carries a 0.69% ongoing charge, which isn’t as cheap as some ETFs. That said, I do consider it a price worth paying to capture the outsized growth potential of the cybersecurity sector. The fund is up 150% since launching in 2015.

Ben McPoland own shares in L&G Cyber Security ETF and Legal & General.

Scottish Mortgage Investment Trust

What it does: Scottish Mortgage is a tech-heavy investment fund with investments worldwide including Tencent, ASML, Alibaba, Amazon and NIO. 

By John Fieldsend, I’m not usually the biggest fan of investment funds. Those fees for managing the fund, sometimes as high as 2%, really eat into any returns I’d get. So the first thing I like about Scottish Mortgage (LSE: SMT) is low fees of only 0.23%

The next thing is a stellar track record. Between 1993 and 2020, the fund returned roughly 1,500% for investors. In comparison, the S&P 500 – which also contains many large tech companies – returned around 700% over the same period. 

The icing on the cake for me is the nature of the fund’s portfolio. With around 30% in private equity and large positions in foreign-owned companies that I’d find difficult to research like Tencent or ASML, I feel an investment in Scottish Mortgage gives me exposure and diversification I wouldn’t otherwise get. 

All these reasons put together are why I took the plunge and picked up some shares recently.

John Fieldsend own shares in Scottish Mortgage.

Seraphim Space Investment Trust

What it does: Seraphim Space Investment Trust is the world’s first publicly listed fund that focuses on space tech.

By John Choong: Seraphim Space Investment Trust (LSE:SSIT) is a fund that invests in early-stage companies that focus on developing space technologies. These investments are made with the intention to dominate the space tech market through being market leaders within industries such as climate, communications, mobility, and even cybersecurity.

Currently, the launch market is seeing a deficit in supply for the first time in decades. This is because there’s been an uptick in the use cases for satellites and other space-related technologies. As such, with investments in companies such as Rocket Lab, Airbus, and Blue Origin, Seraphim is one such fund to capitalise on the increase in demand for space products.

Given that the trust is currently trading at a 60% discount from its IPO price, it wouldn’t be unreasonable to argue that its shares are worth investors buying now for long-term potential. After all, its current share price is 50% lower than its net asset value (NAV) per share.

John Choong has no position in any of the shares mentioned.

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Next month, the Bank of Japan (BoJ) will change its governor. Japan has had 20 years of zero interest rates.

Now, with inflation hitting a four-decade high of 4.2%, the BoJ could follow the Federal Reserve, the Bank of England and the ECB in hiking rates to cool off the economy.

Land of the rising sun – and rates!

The first stock I’d buy to try and get on the right side of this potential macro-trend is WisdomTree Long JPY Short USD (LSE:LJPY).

If the yen rises 10% relative to the US dollar, the price of this Exchange-Traded Product (ETP) will also rise by 10%, excluding fees.

All else being equal, a BoJ rate hike should cause the yen to rise relative to the dollar. That’s because higher interest rates cause people to be more attracted to investing in a country. Demand for its currency on exchange markets is then boosted as a result.

Consider that, converting from yen into dollars, it costs $2.83 to buy a Big Mac in Japan. That puts Japan at number 65 on the Big Mac Index, behind even developing countries like Argentina, Poland and Vietnam, where the cost of living is supposed to be lower. That suggests Japan’s currency has been artificially supressed relative to the dollar by the BoJ’s aggressive policies over the last two decades.

Turning Japanese

Baillie Gifford Japan Trust (LSE:BGFD), a constituent of the FTSE 250, invests in a hand-picked list of 40 to 70 medium- to smaller-sized companies in the East Asian nation.

While the fund is trading at a hefty 10% discount to net asset value, it unfortunately charges ongoing costs of 0.88%. That is substantially above the generally accepted range of 0.5% to 0.75% for actively managed funds.

Regardless, I’m interested in buying shares because a stronger yen would put more purchasing power in Japanese consumers’ pockets. In addition, Japanese companies earning profits in yen would see their valuations increase in terms of other currencies.   

Of course, not everyone in Japan would benefit from a stronger yen. Exporters like Sony and Canon might have to increase prices in terms of foreign currencies or see their margins squeezed.

From Mount Fuji to Mount Debt

Japan’s government debt as a proportion of GDP is the highest in the world. That raises an important question. Can the BoJ actually raise interest rates, given what this would do to the state’s debt repayments?

Every one-percentage-point rise in interest rates would boost debt service by 3.7 trillion yen (£23bn) for the 2025/2026 fiscal year, according to the Ministry of Finance.

But given the Japanese inflation genie is already out of the bottle, I think interest-rate hikes are almost a done deal.

I’ll be positioning myself by buying shares in WisdomTree Long JPY Short USD and Baillie Gifford Japan Trust as soon as I have some spare cash.

The post 2 UK stocks to buy as Japan set to raise rates! appeared first on The Motley Fool UK.

The volatility was triggered by higher-than-expected US inflation data. This was followed by more negative economic forecasts concerning the UK and Germany, as well as new Covid-19 restrictions in China.

But a correction also creates opportunities. In fact, in my opinion, despite the fiscal tightening around the world over the past week, the economic situation hasn’t changed, particularly in the UK. It’s still pretty negative.

However, I’m investing for the long run. So, here are three UK-listed shares I’m looking at adding to my portfolio.

International Airlines Group

IAG (LSE:IAG) is down a staggering 44% over the past 12 months. And, like others, I thought the worst was behind airlines in 2021.

Looking at my portfolio, my decision to buy IAG a few months ago looks like an investment mistake on paper.

But, in the long run, I think the airline group — which includes British Airways — will prove a sound buy.

For one, IAG’s market capitalisation is £5.5bn, but the enterprise value stands at £16.15bn. The market cap takes into account the high amount debt held by the company and the perception of the market. But you’d expect the enterprise value and market cap to be closer.

Demand for travel is also particularly high right now. The issue is around staffing and travel disruption. Come the end of July, we’ll see how well IAG performed in Q2, but my expectation is that the impact of well-publicised travel disruption has been overdone.

Baillie Gifford Japan Trust

The Baillie Gifford Japan Trust (LSE:BGFD) is a publicly traded investment trust, focusing exclusively on Japan. It is run by the same asset management firm as the Scottish Mortgage Investment Trust.

This is a growth-focused fund, and that explains why it’s fallen particularly heavily over the past year.

But there are several reasons why I’m optimistic here.

Firstly, inflation isn’t hitting Japan in the same way it’s hitting the rest of the world. Inflation stood at 1.9% in May. That’s below the 2% target.

Secondly, the Bank of Japan hasn’t increased rates. It’s keeping borrowing costs down to help Japan’s economy recover after the pandemic. This should be good for Baillie Gifford’s growth-focused portfolio.

Finally, Japan might be better positioned to deal with the scarcity we’re seeing globally. But don’t just take my word for it, there’s plenty of material to support this.

Bank of Georgia

I invested in the Bank of Georgia (LSE:BGEO) when Russia invaded Ukraine, despite the bank’s share price collapsing.

But it’s been a good investment so far, and I still think it’s got further to go, despite being down 7.5% this week.

The bank has been going from strength to strength, as has the Georgian economy. The economy grew by a further 14.4% in Q1 despite the war in Ukraine.

Profits doubled in 2021 and 2022 looks like it should be another strong year. Peer TBC Bank has recently announced a 46% YOY increase Q1 profits.

On the back of a stellar 2021, Georgia’s second largest bank has a P/E ratio of just four.

For me, Georgia is a great growth market. Stable, democratic, and I believe Tbilisi is one of the coolest places in Europe!

The post My top UK shares to buy after the market correction! appeared first on The Motley Fool UK.

While this proposed stopgap measure wouldn’t move the needle on the major issues that are important to both sides, it does propose limiting future tariff increases and includes some Chinese concessions, like increasing purchases of US agricultural produce.

Still, given the fact that the Chinese proposal does not address key US demands like intellectual property rights, it’s easy to see why the market is skeptical and waiting to see what happens next. 

Elsewhere, the Bank of England commented on the risk of a no-deal Brexit, saying that although the UK financial system is in a better position to withstand the shock today than it was several months ago, investors and consumers would still see significant price fluctuations, adding that “financial stability is not the same as market stability”.

GVC Holdings

One of the biggest winners today was sports betting operator GVC Holdings (LSE: GVC), which is up 6.4% on the day. The group, which owns bookmakers Ladbrokes and Coral, reported an improved earnings forecast for the second time in three months. In today’s trading update, management said that revenue had increased by 12% year on year for the period 1 July to 30 September, even though the 2018 FIFA World Cup took place over the same time last year. The full-year earnings guidance was upgraded from £650m-£670m to £670m-£680m. 

Interestingly, these improved results come at the same time that the group is closing down many of its brick-and-mortar locations – 41 this quarter. The long-term plan is to close 900 retail locations in a strategy that will see the group shift to a primarily online model. Net gaming revenue for GVC’s online segment rose 14% year on year, highlighting the wisdom of this switch.

Baillie Gifford Japan

Investment trust Baillie Gifford Japan (LSE: BGFD) reported a fall in net asset value of 5% for the year ended 31 August. Although the stock has remained essentially flat on the day, I think this is an interesting development, given the composition of Baillie’s portfolio. It’s biggest holding is Softbank, a Japanese holding company that has very large stakes in both Uber and WeWork. 

Uber has slumped in the months following its much-publicised IPO earlier this year, while WeWork has made headlines due to the collapse of its own IPO plans. Both companies continue to haemorrhage money, and have led many to question Softbank’s CEO Masayoshi Son. 

Softbank only represents around 6.2% of Baillie’s Japanese portfolio, but the high-profile nature of this investment suggests that there could be a lot more to come than today’s small stock price move would suggest.  

The post What happened in the stock market today appeared first on The Motley Fool UK.

HG Sauce

HG Capital Trust (LSE: HGT) gives you exposure to a fast-growing portfolio of more than 30 unquoted investments, primarily in technology and technology-enabled services across Europe, plus two renewable energy funds. This is a racy remit and HG aims to deliver a return in excess of the FTSE All-Share over the longer run. It has delivered in style, with a historic return of 1.6 times the index, and long-term annual compound growth of 10.4% a year over the last decade.

Last month, HG Capital Trust posted a 12.1% rise in net asset value in the six months to 31 August against 5.5% on the All-Share. Today’s update shows the share price rising a meaty 16.9% over the past 12 months. It now has £674m under management and a market cap of £609m, which leaves it trading at an attractive 9.6% discount to net asset value.

In Capital we Trust

Even investors who like to make their own direct equity choices should consider a trust like this, because it gives you a broad spread of under-the-radar stocks. HG is a private equity firm that targets middle-market buyouts primarily in European technology, media and telecomunications. Top holdings include Visma, IRIS, Sovos Compliance, CogitalGroup, Mitratech and other relative minnows. The fund is 50% invested in the UK, but also has 19% exposure to Scandinavia, as well as Northern Europe and the US.

On a cumulative basis, this fund will have more than doubled your money over five years, according to TrustNet.com. It also offers a dividend yield of 3.65%, which is attractive. This is a very nice portfolio diversifier that has proven its merits over the longer run.

Big in Japan

For further diversification, have you considered Japan? After a long, cold winter Japan-focused funds have been making hay in the rising sun, and few more so than Baillie Gifford Japan Trust (LSE: BGFD). Over five years, it has produced a cumulative return of 275%, Trustnet shows, while its benchmark Japan Equities index returned ‘only’ 175% over the same period.

Perhaps this is to be expected, given that the trust invests in medium-to-smaller-sized Japanese companies, which will often outpace the wider market during strong growth periods. But it still opens up an exciting new area that many investors may have overlooked. Latest performance figures for the year to 31 August are hugely impressive. During this time, the trust’s net asset value rose 27.6%, while the benchmark index gained 18.8%. In this period the company’s share price increased a thumping 37.5%.

There are a few potential hiccups. The fund has been managed by Sarah Whitley since 1991, but she is due to retire in April after 27 years. Also, it trades at a premium of 4.51%, a tribute to its recent stonking growth. Finally, you are coming late to the Japanese recovery party, which cannot go on forever. However, Baillie Gifford Japan Trust still looks a great way to plug any regional gap in your portfolio.

The post 2 fast-growing investment trusts I’d buy to turbo-charge my pension appeared first on The Motley Fool UK.

If you’re unsure of which investment trusts to consider, then you might want to start out by taking a look at these top-performing trusts.

Long-term growth

For investors looking for long-term growth, I reckon the Lindsell Train Investment Trust (LSE: LTI) is worth a closer look. Shares in the investment trust have delivered a total return of 241% over the past five years, allowing it to easily beat the Morningstar Global Investment Trust category performance of 130%.

The Lindsell Train Investment Trust seeks to maximise long-term total return by investing in global equities and other Lindsell Train funds. But what’s unusual about this investment trust is that it also owns a significant minority stake in its investment manager, Lindsell Train Limited. This 24.3% stake in the investment management company co-founded by Michael Lindsell and Nick Train accounts for 37.9% of the value of its portfolio.

With such a large position in a single unquoted investment, investors in the trust are highly exposed to fluctuations in the valuation of that single company. And although its position in Lindsell Train Limited has no doubt played a big role in the fund’s recent outperformance, the opposite can also happen in the future.

Nevertheless, many investors seem confident that the fund will continue to deliver market-beating returns, as shares in the investment trust currently trade at a 25% premium to its net asset value of £680.03 per share.

Japan

The Baillie Gifford Japan Trust (LSE: BGFD) is a standout performer in the Japanese category, with a five-year return of 248%, compared to the average investment trust peer performance of 176%.

The fund has been managed by Sarah Whitley since 1991 and primarily focuses on medium-to-smaller-sized Japanese companies. Despite sluggish economic growth in that country, Whitley reckons there are still good opportunities for many stocks in her portfolio.

She likes to pick stocks with above average growth prospects and top holdings include Softbank (3.6%), Yaskawa Electric (2.9%), Misumi (2.8%), Start Today (2.8%) and Persol Holding (2.5%).

Sector focus

As technology disruption continues to impact the business landscape, the technology sector has proven to be a consistent market leader in recent years. With this in mind, the Allianz Technology Trust (LSE: ATT) is a solid pick for investors expecting further significant gains.

Over the past five years, the trust has delivered a cumulative performance of 217%, earning it a top-quartile ranking in the technology sector category. Many well-known tech brands dominate its portfolio, including Amazon (6.6%), Apple (6.2%) and Facebook (4.3%) — its top three positions. But the fund also holds big positions in lesser known names, such as cloud computing firm Workday (3.7%) and payments solutions company Square (3.2%).

And as expected, the US is by far its largest geographical exposure, representing just over 80% of total assets. This is followed by China (6.6%), France (3.0%) and South Korea (2.7%).

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