The group said in a statement: "Recently announced first quarter profit figures for the Japanese market as a whole have been impressive and cashflow generation has been strong. Despite this, smaller company valuations remain close to historic lows."
Consumer discretionary, healthcare and industrial sector stocks performed particularly well, the company said, while sterling returns benefited from the yen strengthening over the period.
The company, which is managed by John MacDougall, outperformed its IT Japanese Smaller Companies sector in the period, as Financial Express data shows.
Performance of Shin Nippon vs IT Japanese Smaller Companies sector over 1-yr
Source: Financial Express Analytics
Baillie Gifford Shin Nippon is trading at a discount of 15 per cent, having traded as tightly as a 2.7 per cent discount and as widely as 22 per cent over the past year.
"Japan is a difficult sector, and remains out of favour, but Baillie Gifford has a good Japan team. When discounts reach the high teens in the sector it provides value, as they can tighten in quite quickly. So
for those who have to have an exposure to the country, a widely discounted investment trust is an interesting way to play it," Simon Elliott, head of investment company research at Winterflood Securities said.
Winterflood recommends Shin Nippon's sister trust Baillie Gifford Japan to investors.