AJIT : Early success for Aberdeen Japan
Aberdeen Japan has beaten its new benchmark index by some margin since it adopted its new mandate in October 2013. Over that period its net asset value rose by 17.6% vs. a 3.5% increase in the TOPIX Index. Over the six months that ended on 30 September 2014 those figures are a 16.5% gain for Aberdeen Japan and a 7.4% rise in the index. The return to shareholders over the six months was 18.8% as the discount tightened a little from 13.4% to 11.8%.
Switching to investing only in Japan rather than across the whole of Asia has impacted the fund’s ability to generate income (as Japanese companies tend not to yield much). The dividend paid in July was 4.5p, down from 4.75p and the Board are warning that next year’ dividend is likely to be low er again.
They changed the management fee arrangements with effect from June from calculating it on net assets plus debt to net assets. The rate remains at 0.95% for net assets up to £50m and 0.75% for net assets above £50m.
The management team’s report contains a long list of stocks that they say contributed to the fund’ excellent performance. They say that share buybacks were key to supporting the stock prices of certain holdings. Tripled profits, buy-backs and a dividend increase helped machine tool manufacturer, Amada, to become the top contributor to the fund’s performance. Daito Trust Construction was also boosted by a buyback of up to 1.7m shares. Nippon Paint’s share price rose on the back of expectations that its largest shareholder Wuthelam Holdings would top up its existing share holdings; it also posted solid results. Shin-Etsu Chemical benefited from good demand for silicon wafers. In the health care sector, Astellas Pharma’s shares outperformed on brisk demand for its prostate cancer drug Xtandi, while Chugai Pharmaceutical’s stock rose on the company’s solid drug pipeline as well as strong royalty income from Roche. In the consumer sector, Unicharm did well after it launched a new line of diapers in China. Snackmaker Calbee rose after it reported solid second-quarter results, supported by robust demand for its snack foods in Japan and North America. Furthermore, membership-based resorts operator Resorttrust gained on anticipation of healthy sales from the launch of new premium condominiums, as well as medical resorts. Baby products maker Pigeon also outperformed after announcing positive sales of higher-margin baby bottles in China.
On the downside, holdings in Yahoo Japan and FCC pared gains. Yahoo Japan was hurt by concerns over the growth of its core advertising business, while FCC’s shares fell after it lowered its forecast on the back of higher-than-expected startup costs at a new plant in the US.