In QuotedData’s morning briefing 14 April 2025:
- Schroder Japan Trust (SJG) delivered a NAV total return of 4.0% over the six months to 31 January 2025, comfortably ahead of its benchmark, which rose 1.4%, despite a shaky start to the period triggered by a surprise Bank of Japan rate hike. SJG’s share price returned 3.2% as the NAV premium narrowed slightly (all figures in sterling terms). Gearing, now implemented via contracts for difference (CFDs), stood at 15.3% at the period end and contributed positively to returns. Chairman Philip Kay said Japan “remains a compelling investment opportunity” and reiterated support for Taketsume’s disciplined, bottom-up strategy, which has outperformed the benchmark over the past five years. The board also highlighted the enhanced dividend policy, with a 4% annual distribution based on average NAV, paid quarterly. Share buybacks were used to manage the discount, with 1.6m shares repurchased during the period at an average 12.5% discount to NAV. Top contributors included optical cable maker Fujikura and industrial conglomerate Hitachi, both benefiting from exposure to the AI value chain. Corporate governance reforms continued to support stock selection, with Sanki Engineering and Niterra among those rewarding shareholders with buybacks and dividend hikes. New positions were initiated in Mizuho Financial, Internet Initiative Japan (IIJ), and Fanuc, with the latter added after tariff-related weakness provided a compelling entry point. Several underperforming or acquired holdings were exited, including SMC, Bridgestone, and NEC Networks. Despite macro uncertainty, including potential disruption from a second Trump presidency, the manager’s outlook remains constructive. Taketsume believes Japan’s shift toward improved capital allocation and pricing power amid inflationary tailwinds provides fertile ground for active managers. Structural reforms and resilient earnings are key to what could be a sustained re-rating of the Japanese market.
[MR comment: Schroder Japan continues to demonstrate the value of active, high-conviction investing in an inefficient but improving market. With Japan’s long-awaited re-rating story still playing out, SJG and its peers look well-positioned to benefit as the market wakes up to the fundamental changes underway in corporate Japan. However, in an environment where global trade policy has been completely upended, there is a compelling case for funds that have a strong focus on companies benefiting from the trend of improving corporate governance in Japan.]
- RTW Biotech Opportunities (RTW) reported a 5.5% drop in NAV per share for March 2025, to US$1.69, outperforming both the Russell 2000 Biotech Index, which it says lost 10.2% and the Nasdaq Biotech Index, which it says lost 6.1%, in what was a turbulent month for the sector. The biotech sector has been hit by a sharp sell-off following escalating trade tensions under a Trump-led global trade war, with many small and mid-cap companies now trading near or below cash levels. Top contributors to performance included Akero, following positive Phase 2 data in MASH patients, and Avidity, which posted modest gains. Key detractors included Rocket and Cargo, the latter falling heavily after ending a pivotal trial early due to safety concerns. RTW’s largest holdings remain Corxel (9.8%), Avidity (9.7%), and Akero (9.3%). The manager comments that it has responded to the political shift with the creation of a Government Affairs team and believes its portfolio is relatively well insulated from tariff and pricing pressures. It adds that many development-stage companies remain focused on high unmet need indications, with strong FDA engagement and limited impact so far from recent regulatory turbulence. RTW also participated in several new investments during the quarter, including Alesta Therapeutics, Numab, and Umoja Biopharma, as it seeks to take advantage of depressed valuations across the space.
- Life Science REIT (LABS) has let 5,600 sq ft at the Innovation Quarter at Oxford Technology Park to Oxford Expression Technologies Limited, a biotech company specialising in protein production for vaccine development, disease research, and drug testing. LABS will now fit out the ground floor shell of the premises to laboratory specification and the first floor as fitted offices. The tenant will pay an annual rent of £258,200 (£46.50 per sq ft) on a 10-year lease, which sets a new rental record for the park. The lease includes a rent review at the end of the fifth year.
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