JPMorgan Japanese outperforms the benchmark for the year- JPMorgan Japanese had a return on net assets of 26.8%, which outperformed the benchmark by 14.2%. JPMorgan Japanese on 26th March 2018 reached a market capitalisation of £712.7 million which was sufficient enough for it to become a constituent of the FTSE 250 Index on 31st March 2018. The manager has decided, with some encouragement from the board, increasingly to divest from larger capitalisation ‘core’ stocks and invest instead outside the largest constituents of the TOPIX Index and also increase the holding periods of the investments made.
Income received during the year went up from 5.52p in 2017 to 5.53p this year. Once approved at the general meeting dividends for the year will 5.00p per share which is equal to 2017.
The portfolio characteristics stayed the same: balance sheet and free cash flow are stronger, earnings growth faster and return on equity higher than the market as a whole. The portfolio holdings were reduced from seventy to sixty one and gearing increased from 13.6% to 14.7%. Largest purchases were Hikari Tsushin and SBI, and additional holdings of Shiseido, Recruit and M3. The most significant sales were Sumitomo Mitsui Financial, Orix, NTT, and Sanwa Holdings, also a reduction on the holdings of Mitsubishi UFJ. Top contributing stocks on the year were Shiseido, CyberAgent, M3, MonotaRO, and Recruit. Largest negative impact was Mercari, Surgua Bank (compliance failure), Komatsu, Square Enix and Nexon. All companies that had a negative impact have been sold except for Surgua Bank.
Investment managers Nicholas Weidling and Shoichi Mizusawa had this to say about the investment outlook for the Japanese market. “The Japanese market is more cyclical than other developed markets and can be impacted by global economic developments, both positively and negatively. Currently there are concerns about a potential trade war between the United States and China. In addition, Chinese macro data is weaker than recent years and negotiations for a new trade deal between the United States and Japan are at an early stage. However, we continue to see robust corporate earnings growth, progress on corporate governance reform and good economic activity in Japan.”
JFJ-JPMorgan Japanese outperforms the benchmark for the year