A weak pound helped the Baillie Gifford Shin Nippon fund beat its benchmark during a flat six months on the Japanese market.
The Edinburgh-based PLC's net asset value per share rose by 15.3% compared with a 9.8% rise in the MSCI Japan Small Cap Index and the share price increased by 8.1%.
The fund offloaded its shares in sportswear brand Asics after losing faith in the management to catch up with Nike and Adidas.It also sold its stake in biotech company SanBio after a trial of stem-cell treatment for strokes flopped.
BG Shin Nippon's biggest success was GMO Payment Gateway, whose core business is online payments processing. New investments included online cosmetics company Kitanotatsujin and a specialist machine tool maker Tsugami.
In its report for the six months to July 31, the company said: "During the first half of this year, we witnessed anaemic market conditions driven primarily by macroeconomic concerns. Investors remained cautious due to the ongoing US-China trade war and slowing economic growth across key geographies.
"Unsurprisingly, Japanese equities remained under pressure during this period. High growth smaller companies and cyclical businesses with meaningful overseas sales were especially hard hit as investors sought refuge in high yielding sectors with dull growth prospects.
"Despite these short-term cyclical headwinds, we remain confident that the disruptive, high growth stocks that we own in the portfolio are well positioned to deliver attractive returns over the medium and long term."
