BAILLIE Gifford’s £646 million Japan investment trust put in a “disappointing” performance in the six months to the end of February, with net assets falling by 16 per cent against a decline of almost 9% in the Tokyo Stock Price Index.

Chairman Nick Bannerman said that despite the poor short-term performance, which came after the trust outperformed by more than 14% in the year to August 2018, “we continue to believe that it is more meaningful to consider performance over longer time horizons”.

Noting that the trust’s net asset value had risen by 64.4% against the index’s 40.4% over the past three years, Mr Bannerman said the longer-term view was “encouraging”.

“Herein we see one of the challenges of equity investing in action,” he said. “Strategies can deliver good results over the long term but that does not make them immune to short-term challenges.

“To achieve a good long-term outcome we need to be prepared to accept short-term volatility and focus on actual investing - holding a portfolio of good companies with attractive growth prospects for the long term.”

The biggest individual detractors to performance were Cyberagent, Outsourcing and Zozo while the largest contributors were Pan-Pacific and HIS.

Mr Bannerman said that while there were “various signs of a global slowdown” during the six months, the board “remains optimistic”.