Fidelity Japanese Values outperforms in 2015

2015 was a good year for Fidelity Japanese Values as it returned 24.6% on net assets and 20.5% to shareholders – both beating the total return on the Russell Nomura Mid/Small Cap Index Total Return (in sterling terms) which returned 19.4%.

Nicholas Price’s manager’s report says, over the year, stock selection in the services sector was the principal driver
of the company’s outperformance relative to the Reference Index. Three of the top ten contributors to performance over the year were online businesses, namely Kakaku.com, Septeni Holdings and M3. In addition, hotel and resort
operator Fujita Kanko, a recent addition to the portfolio, performed well on an increase in hotel room rates and a recovery at its hot spring resort business.

Among financials, notable performers included Anicom Holdings, a pet insurance company – this position added 1.3% to the NAV and was the largest positive contributor to the fund’s performance, and Financial Products Group, a provider of financial services for small companies seeking tax-efficient investments. These stocks have added value over a number of years, but as their valuations started to look stretched, these positions were sold.

In the retail sector, MonotaRO, an online supplier of factory-use consumables, and Seria, an operator of discount stores, made material contributions to returns. However, this was tempered by the disappointing performance of some inbound tourism-based stocks towards the end of the year. Both positions were sold.

Elsewhere, holdings in Asahi Intecc, a maker of specialised medical tools, and Ono Pharmaceutical, a mid-sized drug company renowned for its anti-cancer treatments, were notable outperformers. Some profits were taken following their share price gains, but overweight positions in both companies were retained.

Conversely, stock selection in the information and communication sector detracted from performance. One of the largest detractors in 2014, WirelessGate (a provider of Wi-Fi services in public spaces) continued to struggle and the
position was sold. Mobile Create Company, a provider of mobile management systems to transportation operators, lost ground as rising development costs resulted in disappointing earnings results. This stock was also sold. A new
position in mobile carrier SoftBank also hurt performance, but looks attractive from a mid to long term perspective.

FJV : Fidelity Japanese Values outperforms in 2015