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Good start for AVI Japan Opportunity

AVI Japan Opportunity Trust : AJOT invests in undervalued cash-rich and over-capitalised smaller Japanese companies (Small Caps)

Good start for AVI Japan Opportunity – the first annual report for AVI Japan Opportunity covers the period from its incorporation on 27 July 2018, through its launch on 23 October 2018 and to 31 December 2019. The trust’s NAV return over this period was 14.3%, well ahead of the 7.9% return generated by the MSCI Japan Smaller Companies Index. There will be a dividend of 0.9p for the period.

Extract from the manager’s report

This robust performance has been driven by a combination of several standout performers and a lack of significant detractors. The +8.6% contribution from the top three contributors, NuFlare Technology (+4.1%), Digital Garage (+2.6%) and Fujitec (+1.9%) far exceeded the combined -1.1% loss from the three largest detractors, Hi-Lex (-0.5%), Konishi (-0.4%), and TBS (-0.2%).

It has been a difficult time for the Japanese market since AJOT was launched. The TOPIX’s +8.2% return has underperformed that of the MSCI Europe (+15.6%) and S&P 500 (+17.4%) indices. Japan is seen as a proxy for global trade and, with the US-China trade war dominating headlines, global investors have continued to be net sellers of Japanese equities, notwithstanding an encouraging reversal of this trend towards the end of the year. However, beneath the surface, companies are continuing to improve standards of corporate governance and increasingly focus on shareholder returns. This is particularly reflected in rising Returns on Equity (ROE) and in the strong increase in announced share buybacks this year. Coupled with fundamental valuation metrics that are far more attractive than the rest of the developed world, we continue to believe that Japan represents one of the most attractive equity market opportunities today.

The full report has much more detailed information on he underlying investments and we suggest that interested readers look out for the Annual Report which should be available shortly.

AJOT : Good start for AVI Japan Opportunity

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