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Investment trust insider on Japan

Investment Trust Insider on Perpetual Income and Growth

Investment trust insider on Japan – James Carthew: It’s not over for Japan growth but activists are unlocking value

Last February I looked at Japan investment trusts and suggested that both the growth-oriented JPMorgan Japanese (JFJ) and value activists Nippon Active Value (NAVF) and AVI Japan Opportunity (AJOT) might be attractive. Then we had the big lurch in the market against growth stocks over the second half of 2021 and consequently returns on the growth-style funds don’t look great.

In fact JFJ has lost 21% over the past 12 months, but many of the growth-focused small-cap funds such as JPMorgan Japan Small Cap Growth and Income (JSGI), Baillie Gifford Shin Nippon (BGS) and Atlantis Japan Growth (AJG) fared even worse – off 25%, 24% and 22% respectively.

JSGI has announced an overhaul of its three-strong fund manager team which sees Miyako Urabe replace Eiji Saito as lead manager. Eiji’s decision to leave fund management and retrain as a lawyer is not linked to the recent disappointing performance.

The Japanese market is broad and, with plenty of stocks to choose from, the portfolios of the small-cap trusts have little overlap. AJG attributes part of the recent pullback to investors’ fatigue at flotations. Last year the Tokyo Stock Exchange saw 125 companies come to market in initial public offers (IPOs), in line with the 120 that floated in London. AJG’s managers say the rush of new listings has led investors to pull money out of existing positions.

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