Conviction drives returns

Having delivered impressive returns through 2023, Japanese markets have continued to rise this year, although the manager notes that it has not been entirely smooth sailing. A falling yen and a 41-year high for inflation set the stage for successive rate hikes for the first time in almost two decades. The second of these appears to have contributed to a historic sell-off for Japanese equities. The manager notes that this has been particularly difficult for yen-sensitive exporters, which include some of Japan’s largest companies. Positively, JPMorgan Japanese Investment Trust (JFJ) has very limited exposure to these sectors of the market, focusing instead on what it deems to be higher-quality growth stocks that the managers expect will benefit from the structural changes occurring across the economy. These developments appear to be increasingly encouraging. For a newly-enlarged JFJ following the announced combination with Japan Small Cap Growth & Income, which, subject to receipt of final approval from JGSI’s shareholders, is due to complete on 24 October 2024, should provide the foundation for a period of long-term growth.

Capital growth from Japanese equities

JFJ aims to produce capital growth from a portfolio of Japanese equities and can use borrowing to gear the portfolio within the range of 5% net cash to 20% geared in normal market conditions.

Source: Morningstar, Marten & Co

Fund profile

Further information about the trust is available at www.jpmjapanese.co.uk

JPMorgan Japanese Investment Trust (JFJ or the trust) aims to achieve capital growth from investments in Japanese companies. For performance monitoring purposes, the trust is benchmarked against the returns of the Tokyo Stock Exchange Index (commonly known as TOPIX) in sterling.

The trust may make use of both long- and short-term borrowings with the aim of increasing returns.

Day-to-day investment management activity is the responsibility of JPMorgan Asset Management (Japan) Limited in Tokyo. The co-investment managers are Nicholas Weindling, who has had responsibility for JFJ’s portfolio for more than a decade, and Miyako Urabe, who was appointed co-manager in May 2019. They are supported by a well-resourced team.

High-quality companies that are capable of compounding their earnings sustainably over the long term

The investment emphasis is on identifying high-quality companies that are capable of compounding their earnings sustainably over the long term. That means investing in companies in growing industries that have strong balance sheets and are resilient in the face of macro-economic issues.

Japan Small Cap Growth combination

On 31 July 2024, it was announced that, subject to the approval of shareholders in both companies, the assets of JP Morgan Japan Small Cap Growth & Income (JSGI) would be rolled into JFJ. JSGI Shareholders will be entitled to elect to receive cash in respect of part or all of their shareholding, subject to an aggregate limit of 25% of JSGI’s issued share capital (excluding any treasury shares). The current investment managers (Nicholas Weindling and Miyako Urabe) will continue to manage the enlarged JFJ portfolio, investing in accordance with JFJ’s existing investment objective and policy. The transaction is expected to conclude by the end of October 2024.

As we highlighted when the transaction was first announced, the combination of the two JPMorgan funds will increase the net assets of JFJ to approximately £1bn. This will make it comfortably the most liquid and largest dedicated Japan trust, which, the managers note, should help fulfil the market’s desire for scale, which has become increasingly apparent in recent years. The managers add that the deal also makes sense at a portfolio level, with clear similarities across the two investment mandates with almost 40% of JSGI’s companies already a part of JFJ. It says that this should also improve the ease with which the two companies will be amalgamated. The managers have noted that they may look to move some of JSGI’s positions, such as its smaller-cap holdings in sectors that are already covered in the JFJ portfolio. This will become clearer once the deal is formalised.

JSGI shareholders may elect for a cash option, up to an aggregate limit of 25% of the company’s outstanding shares, excluding shares held in treasury, at a 2% discount to its residual FAV.

In addition to the increased scale and secondary market liquidity, the deal is expected to reduce JFJ’s annual management fee from 0.58% on net assets to around 0.49% (depending on the uptake of the cash exit opportunity for JSGI shareholders). The marginal fee rate will be 0.35% on net assets in excess of £750m. For JSGI shareholders rolling into JFJ, this represents a significant reduction in headline management fees from 0.83%. Ongoing charges are expected to be 0.62% in the 12 months following the transaction compared to 0.75% in the half-year to 31 March 2024.

Following the completion of the transaction, the JFJ board intends to undertake a review of JFJ’s dividend policy, as it is noted that that JSGI has paid an enhanced dividend since 2018.

Market backdrop

Early in 2023, the Tokyo Stock Exchange (TSE) made an announcement which threatened to delist those companies unable to “comply or explain” why they continue to trade at less than the value of their shareholders’ equity. This applies to almost 50% of the companies listed on its exchanges (compared to just 5% for the S&P500) which the managers believe is a prime example of the inefficiencies that have plagued Japanese markets.

This announcement from TSE is part of a long list of measures adopted by Japanese institutions in recent years as the economy attempts to lift itself out of a long term deflationary spiral. The managers note that these changes have gathered momentum and appear to be having a positive effect. The benchmark TOPIX index is up 53% over the last two years, while the Nikkei 225 made headlines recently for recording a new high-water mark, more than 30 years on from the last peak made during the Japanese asset price bubble in 1989.

It is not the first-time that corporate reforms have promised a new dawn for Japanese equities. The managers note that over the past decade, there have been a number of periods where optimism has led to significant capital inflows into the world’s third largest economy, only to fizzle out as fundamental realities failed to match the hype. They say that this goes some way towards explaining why the recent rally continues to be met with some scepticism, particularly among foreign investors whose allocations remain relatively muted when measured against Japan’s overall share of equity value. The market has seen roughly US$75bn of foreign inflows since 2023; well down on the circa US$250bn that exited the market over a six-year period from 2017.

Positively, they say, there are strong arguments to be made that corporate overhauls are having a much more profound impact on both corporate attitudes and underlying fundamentals this time around. For example, over the last 12 months dividends have grown at their fastest pace in over 20 years while share buybacks have reached fresh all-time highs year-to-date, accelerating well past previous levels.

The managers highlight the $38.5bn offer for Seven & i Holdings from Canadian company Alimentation Couche-Tard which they say provides another example of the changing corporate landscape and the potential to attract foreign capital. This was made possible thanks to the introduction of a takeover code and is the first time we have seen a foreign bid for a major Japanese company.

This momentum has coincided (and in many cases helped propagate) a period of ongoing economic strength, with capital expenditures, real wage growth (which turned positive in June for the first time in over two years), and other factors, such as tourism lifting GDP. The managers note that over the course of 2023, this occurred during a wider slowdown in the global economy, with Japan’s economic cycle appearing to de-synchronise, offering what they believe is another leg to the bull case for the country’s capital markets.

New year challenges

The managers note that 2024 has brought its own challenges, however. With economic conditions appearing to improve and inflation rising to a 41-year high, the Bank of Japan (BOJ) moved to shift away from its ultra-easy monetary policy settings. In March, the BOJ announced it would be raising interest rates for the first time in 17 years, while also altering its long-running yield curve control policy, allowing the 10-year government bond yield to climb above 1%. Four months later, the Bank doubled down with an additional hike which appears to have been a shock given the preceding price action. Japanese equities tumbled 22% over just three trading sessions as the market appeared to get tangled up in the unwinding of the yen carry trade and a volatility shock emanating out of the US. The sell-off was bookended by a single-session fall of 12%, one of the worst days in Japanese market history, especially for rate-sensitive exports. The TOPIX has since recovered these losses.

The managers note that the announcement has helped lift the currency from a 34-year low against the dollar; however, there remains a significant interest rate disparity between Japan and other major global economies, particularly the US. The manager adds that the weak currency has weighed on economic performance, driving up the cost of food and energy and contributing to a steep drop-off in consumer spending, which makes up more than half of Japan’s GDP. Additionally, it says, the falling yen has created a barrier for foreign investors, with returns eaten away by the depreciating currency.

Figure 1: JPY versus USD 30/10/2019 to 30/10/2024

Source: Bloomberg

Additional volatility was caused by what the managers describe as the somewhat unexpected election of new PM Shigeru Ishiba, who promptly called for a general election on 27 October. Markets fell following the announcement, however, have since recovered. The JFJ managers note that they see no immediate policy implications and have made no changes to the portfolio as a result.

Optimism despite speedbumps

The managers believe these developments have contributed to the market consolidation over the last few months, with the TOPIX trending sideways since March (notwithstanding the August fireworks). Despite this, they believe there remains cause for optimism for both the short-term headwinds created by the currency, and Japan’s broader economic trajectory.

Since the end of June, the yen has recovered around 7% against the dollar, likely as the market has reacted to the BOJ’s tightening cycle and signs that the US economy is beginning to soften – although recent data out of the US suggests this transition may be slower than initially thought. The managers note that whilst the currency remains deeply depressed, the BOJ’s relatively hawkish outlook now stands in contrast to that of the US, which, they say, should pave the way for further gains.

Figure 2: Japanese implied overnight rate & number of rate hikes

Source: Bloomberg

More importantly, the managers say, the key drivers of Japan’s economic renaissance are as strong as ever and should not be discounted due to the external influence of the US and other factors. As noted, they believe the most important development remains the ongoing corporate governance reforms – which we have discussed in detail in previous notes – with the structural transformation across the market being the key to unlocking long-repressed value.

As JFJ’s manager notes, there also remain other, less-talked-about, factors which will also continue to drive momentum. One example is that Japan is at a very early stage of digitalisation compared to the rest of the world. For example, cashless payment use has only just reached 30% (including credit and debit cards), while just one in five Japanese medium-sized businesses are selling online at rates well below other developed counterparts. The managers believe that increasing the adoption rate of these and similar technologies is a simple but effective way to improve money velocity, helping drive the domestic demand which remains the growth engine of the economy.

Japan is also home to some of the world’s largest and most-advanced robotics companies, which the managers highlight are capitalising on the global industrial automation boom as supply chains restructure following the COVID-19 pandemic. Crucially, they say, these advancements will help accelerate productivity across the workforce while helping address the demographic issues stemming from its ageing population and shrinking workforce.

Valuations back up reform narrative

The managers say that while the economic narrative captures much of the attention, corporate earnings have laid the foundation for the market’s outperformance in recent years. As Figure 3 highlights, earnings in Japan have continued to accelerate, running well ahead of both nominal growth and also the returns of the high-performing S&P500. Notably, the TOPIX would be even further ahead of the benchmark US index if we exclude the “Magnificent 7” companies which accounted for almost 50% of its earnings during the most recent quarter.

Figure 3: TOPIX, S&P 500, MSCI Europe EPS & Japan Nominal GDP CY 2010 – CY 2024

Source: Marten & Co, Bloomberg

This rate of earnings growth has supported valuations that remain at a significant discount to global peers, as highlighted in Figure 4.

Figure 4: Valuation of various indices as at 30 September 2024

Source: MSCI

JFJ targeted for growth

The managers believe that targeting the developments discussed above is the best way to deliver long term performance. This strategy has led to mixed results over the last few years. However, they note that much of this is due to the relative growth of low-quality exports and more cyclical companies which have benefitted from the falling yen and a global flight towards larger caps and more value-orientated positioning. The managers see little utility in the sentiment-driven fluctuations of these companies, many of which operate in stagnant or declining industries. Longer term, they say this strategic conviction has led to solid outperformance over the market and peer group as highlighted in the performance section, beginning on page 13.

The managers continue to believe that targeting investments exposed to the structural changes occurring across the economy remains comfortably the most viable path to significant, long-term alpha – not just vs. Japanese markets, but also against global benchmarks. They say that indications of this potential were evidenced in the price action over the last few months, mostly notably following the 31 July rate hike that saw a number of rate sensitive cyclicals collapse, dragging down the index. As a result, JFJ has now outperformed over the past year and, as we have discussed, the manager is increasingly confident that this momentum can be sustained in light of the speed and breadth of the changes taking place across Japan.

Asset allocation

Bearing in mind the structural differences between JFJ’s portfolio and that of the index, the managers say that it is no surprise that it trades at a relative premium on a forward price multiple as shown in Figure 5. However, the trust becomes considerably cheaper when accounting for its much-higher expected earnings growth. Given the speed in which operational developments are occurring across the portfolio, the managers hope that this rate can increase further, providing even greater value for investors.

Figure 5: Portfolio characteristics as at 30 June 2024

Source: JPMorgan Asset Management

Portfolio activity and top 10 holdings

Given the fast-moving economic backdrop, the managers have continued to fine-tune the portfolio. There have been several developments since our most recent note, with Advantest – a new purchase for the company – Nintendo, Secom, and Hoya moving into the top 10 replacing Sony, OBIC, Tokyo Electron, and Nippon Telegraph, the latter of which has been sold outright.

Figure 8: JFJ’s 10 largest holdings as at 31 August 2024

Source: JPMorgan Asset Management

The new top 10 additions include:

Figure 9: Advantest Corp

Source: Bloomberg

Advantest Corp

Advantest is the world’s largest supplier of chip testing equipment, controlling over 50% of the market. The company has its sights set on increasing its already dominant share of what the managers describe as a secular growth market which has expanded rapidly in recent years as chip complexity has increased along with the build-out of data centres and AI. Its shares have matched this momentum, almost tripling since the beginning of 2023. While this has seen valuation multiples expand, the company continues to see rapidly increasing demand, announcing a 53% upgrade to its operating profit guidance for FY2025 from ¥90bn to ¥138bn. The company says further momentum is expected as demand for cloud technology and AI accelerates. The company is also increasingly bullish on increasing its market dominance, targeting a 7% increase in market share over the next few years.

Figure 10: Hoya

Source: Bloomberg

Hoya

Hoya is a manufacturer of high-precision optical glass. Its products are used in a wide variety of end products – from glasses and contact lenses to digital cameras and medical devices. It is a market-leader in its key business segments and reinforces this position through investment in research and development.

The managers say that its positioning in relatively niche but globally important sectors provides the key to maintaining strong margins. This is especially true for its info tech segment, where its HDD glass substrates and EUV mask blanks are used in the manufacturing of hard drives and semiconductor equipment. Both of these industries continue to expand thanks to the increasing data requirements driven by cloud technology, and, more recently, AI. The managers note that the mask blank technology in particular is crucial, given that Hoya is one of only two companies able to produce these products. With high barriers to entry, the company believes the segment can continue to generate strong cashflows going forward, which can be used to expand its R&D and investment in other technologies.

Other portfolio developments & new positions

In addition to the top 10, the JFJ has also added new positions in Koa, and Kinden, and have sold outright Ibiden, Miura, Nippon Telegraph, and Square Enix. The managers note that there have also been positive developments relating to existing holdings including Softbank and Recruit Holdings.

Figure 11: Kao Corp

Source: Bloomberg

Kao Corp

Like Softbank, leading consumer goods retailer Kao is another company that JFJ has held previously. The manager sold the stock based on poor operational performance following the pandemic, with Kao consistently underperforming its peer group, its return on equity ratio being one of the worst in the industry despite boasting a portfolio of market leading brands.

Since then, the managers note that the company has made considerable changes to its organisational structure, such as a plan to restructure its cosmetics business, narrowing down its focus from the current 19 brands to a core of six. The company says these developments have already begun to improve operational performance and have occurred much quicker than the market had anticipated, with the benefits flowing through to the company’s shares, which are up 31% over the past year.

The managers believe that Kao provides an excellent example of the opportunities which are available across the Japanese economy as these types of restructures take shape.

Figure 12: Kinden Corp

Source: Bloomberg

Kinden Corp

Similar to Advantest, the managers note that electrical and telecommunication engineer Kinden holds structural upside through the design construction and maintenance of datacentres, which have become increasingly crucial to the growth of AI and the cloud. This increasing demand has helped drive improved sales growth and profitability as the company’s backlog has increased rapidly. In addition, the managers note that it has made great strides in its efforts to improve corporate value, as one of the many Japanese companies which has traded on a price to book value of less than 1x. So far this year, Kinden has announced a number of initiatives which seek to address this issue, and the company now trading in line with its shareholder equity.

Kinden Corp has also announced a new shareholder return policy, increasing its dividend payout ratio from 30% to 40% for a total payout ratio of 50%–60% by FY2023. It also announced plans to reduce strategic shareholdings by 25%.

Figure 13: Recruit Holdings

Source: Bloomberg

Recruit Holdings

Recruit Holdings has been a long-term position for JFJ and has vaulted into the top 10 after a stellar year which has seen its shares grow by over 100%. The managers note that the company, which owns the world’s top employee website, Indeed, and HR platform Glassdoor, has capitalised on market share gains following the COVID-19 pandemic and now finds itself in a position of strength as the labour market has rebounded both in Japan and abroad (over half its revenues are generated outside of Japan, the bulk of which come from US-based Indeed).

The managers say the company has embraced governance reforms and a shift towards more shareholder-friendly policies, implementing new pricing models and cost-saving measures in an effort to modernise its operations. Recruit also recently issued a buyback authorisation of ¥600bn (roughly USD$4bn), around 6% of its outstanding shares. It has also been a target of activism, with ValueAct Capital announcing a stake in the company in November 2023. The US-based hedge fund identified what it believes is an opportunity for Recruit to double its share price if it can improve its capital allocation.

Figure 14: Softbank

Source: Bloomberg

Softbank

SoftBank is one of Japan’s largest publicly-traded companies and owner of stakes in many energy, financial and technology companies. JFJ had previously held a stake in SoftBank which was exited after a strong rally with the managers holding doubts over its future strategy. Since then, the group has listed its subsidiary ARM, a chipmaker, in the US last year. This has greatly improved visibility regarding the value of the whole group, and the managers have re-entered on the view that it is now trading at a wide and appealing discount to NAV.

Performance

Figure 15: JFJ performance relative to benchmark (TOPIX) and peer group to end September 2024

Source: Morningstar, Marten & Co.

As the chart in Figure 15 shows, JFJ suffered a steep decline in its relative performance towards the end of 2021. The managers note that this was a period where more growth-focused stocks struggled, triggered by rising interest rates across Japan’s develop market peers. This resulted in the company giving back all the relative gains that it had made over the previous two years, leaving it marginally behind its peer group and benchmark over the last five years.

More recently, however, the trust’s returns have been strong, as shown in Figure 16. This reflects the managers’ conviction in the structural changes occurring across the Japanese economy. As noted in the asset allocation section, these have begun to have a positive effect on business fundamentals with strong earnings and revenue growth witnessed across the portfolio. The managers note that this has occurred during a period of weakness across broader market benchmarks in Japan, driven by its more cyclical exposure, and they believe there remains significant scope for JFJ to continue to outperform.

Figure 16: Cumulative total return performance over periods ending 30 September 2024

Source: Morningstar, Marten & Co.

Peer group

Up-to-date information on JFJ and its peer group is available on our website

For the purposes of this note we have used the constituents of the AIC Japan sector as a peer group. The trusts listed here have roughly similar objectives except for CC Japan Income & Growth, which – as its name implies – places more emphasis on income generation and consequently has the highest yield. By contrast, JFJ’s growth focus puts its yield towards the bottom end of the peer group.

Figure 17: JFJ’s peer group comparison data as at 30 September 2024

Source: Morningstar, Marten & Co

JFJ is already the largest and most liquid trust in its peer group, with its scale boosted further by the anticipated combination of JSGI. This is also expected to see its ongoing charges ratio drop to 0.62% which would be the lowest in the peer group. The discount is the second lowest of this peer group, but the range here is quite tight. JFJ is not managed to produce a yield.

Figure 18: Cumulative NAV total return performance over periods ending 30 September 2024

Source: Morningstar, Marten & Co

As Figure 18 shows, JFJ has outperformed its peer group by a wide margin over the past year. In the longer term, performance remains in the middle of the pack, as value-focused companies such as CC Japan Income & Growth appear to have benefitted from a global shift away from growth assets. However, as we have seen in recent months, market sentiment can swing quickly.

Dividends

Figure 19: JFJ dividend history

Source: JPMorgan Asset Management

The board’s dividend policy is to pay out the majority of the revenue available each year. The investment objective’s emphasis on capital growth means that income generation is not a focus for the managers. A revenue reserve has built up over the years and this stood at £10.6m at the end of September 2023.

Discount

Over the 12 months to the end of September 2024, JFJ’s discount moved within a range of 15.8% to a 6.4%, averaging 9.1%. At the time of publishing, the discount was 12.6%.

Figure 20: JFJ premium/(discount) over five years ended 30 September 2024

Source: Morningstar, Marten & Co

Buyback policy

In recent years, the company has kept a close eye on the level and volatility of its discount. Since 2020, this has resulted in increased expenditure on marketing and a series of targeted buybacks, with the board being increasingly active in recent years. As Figure 21 highlights, the company has repurchased around 11,000,000 shares over the last 12 months.

Figure 21: JFJ shares repurchased

Source: JPMorgan Japanese Investment Trust

Fees and costs

The trust employs JPMorgan Funds Limited as its Alternative Investment Fund Manager (AIFM) and company secretary. Management of the portfolio is delegated to JPMorgan Asset Management (UK) Limited, which in turn delegates day-to-day investment management activity to JPMorgan Asset Management (Japan) Limited in Tokyo. The manager is a wholly-owned subsidiary of JPMorgan Chase Bank which, through other subsidiaries, also provides marketing, banking, dealing and custodian services to the company.

Tiered management fee structure and no performance fee – fee to fall post-merger

JPMorgan Funds Limited is entitled to an annual management fee calculated as 0.65% of the first £465m of net assets, 0.485% on the next £465m and 0.40% on amounts above £930m. However, subject to the successful completion of the JSGI transaction, the blended annual management fee will be reduced to 0.49% on net assets, depending on the uptake of the cash exit opportunity. The marginal fee rate will be 0.35% on net assets in excess of £750 million. For JSGI shareholders rolling into JFJ, this represents a significant reduction in headline management fees from 0.83%.

There is no performance fee. The contract can be terminated on six months’ notice. For accounting purposes, in the last financial year the management fee was charged 10% against the revenue account and 90% against the capital account.

Other administrative expenses for the year ended 30 September 2023 amounted to £1,276k (FY22 £960,000).

For the year ended 30 September 2023, the trust’s ongoing charges ratio was 0.74%, up from 0.68% for the prior year as the trust shrank in size (magnifying the effect of fixed overheads).

Capital structure

JFJ is a UK-domiciled investment trust with a premium listing on the main market of the London Stock Exchange. As at 31 August 2024, there were 161,248,078 ordinary shares in issue, of which 144,212,089 had voting rights and the balance of 17,035,989 were held in treasury.

The company’s accounting year end is 30 September and AGMs are usually held in the following January. The last was held on 11 January 2024.

Gearing

The company has the ability to use borrowing to gear the portfolio within the range of 5% net cash to 20% geared in normal market conditions.

The company’s gearing is facilitated by a ¥5bn floating rate revolving credit facility provided by Mizuho Bank and a series of senior secured loan notes:

• ¥2bn fixed rate 10-year series A senior secured loan notes at an annual coupon of 0.76% which will expire on 2nd August 2028.

• ¥2.5bn fixed rate 15-year series B senior secured loan notes at an annual coupon of 0.95% which will expire on 2nd August 2033.

• ¥2.5bn fixed rate 20-year series C senior secured loan notes at an annual coupon of 1.11% which will expire on 2nd August 2038.

• ¥2.5bn fixed rate 25-year series D senior secured loan notes at an annual coupon of 1.21% which will expire on 2nd August 2043.

• ¥3.5bn fixed rate 30-year series E senior secured loan notes at an annual coupon of 1.33% which will expire on 2nd August 2048.

In April 2023, JFJ secured a three-year ¥10.0 billion floating rate revolving credit facility with ICBC Limited maturing on 14th April 2026. The facility has a non-utilisation fee of 0.60%.

Major shareholders

Figure 22: Major shareholders as at 30 September 2024

Source: JPMorgan Japanese Investment Trust

Core management team

Nicholas Weindling is a country specialist for Japan equities and a member of the Japan team within the Emerging Markets and Asia Pacific (EMAP) Equities team based in Tokyo. Nicholas joined JPMorgan Asset Management in 2006 from Baillie Gifford in Edinburgh, where he worked initially as a UK large-cap analyst and latterly as a Japanese equities investment manager. Nicholas obtained a BA (Hons) in History from Cambridge University. He was made manager of JFJ in August 2010.

Miyako Urabe is a country specialist for Japan equities, and a member of the Japan team within the Emerging Markets and Asia Pacific (EMAP) Equities team based in Tokyo. She joined JPMAM in 2013 from Credit Suisse Securities Equity Sales desk in Tokyo as an Asia ex-Japan specialist. Miyako began her career at Morgan Stanley MUFG Securities, covering Japan and Asia ex-Japan. She obtained a Bachelor’s degree in Economics from Keio University, Japan.

Board

JFJ’s board currently comprises six directors, all of whom are non-executive, considered to be independent of the investment manager and do not sit on other boards together. Brief biographies for each director are provided below. It is board policy that all directors retire and offer themselves for re-election at each AGM. The average length of service is 4 years, with Stephen Cohen, the chairman, being the longest-serving, with over seven years of service under his belt.

Christopher Samuel retired from the board on 11 January 2024. As planned, Stephen Cohen took up the position of chairman in Samuels’ place, while Sally Duckworth replaced Cohen as chairman of the audit committee. Jonathan Kestenbaum joined the board on 1 October 2023 in advance of Samuel retirement.

Relating to the merger with JSGI and conditional on its approval, JSGI director Tom Walker will be appointed to the board. The board of the enlarged JFJ will therefore consist of the six current directors of JFJ and one director from the board of JSGI.

Figure 23: Board member – length of service and shareholdings

Source: JPMorgan Japanese Investment Trust

Stephen Cohen (chairman)

Stephen has had over 34 years in executive roles in asset management, including setting up two businesses in Japan and living there for seven years.

He managed Japanese equity portfolios for 10 years. He also latterly ran a Japanese equity activist business. Currently, Stephen is a non-executive director of Schroder Capital Global Innovation Trust Plc.

Sally Duckworth (chairman of the audit committee)

Sally is an established entrepreneur, with over 20 years’ experience of working in, investing in or advising companies, predominantly with a technology focus. She qualified as a Chartered Accountant with PricewaterhouseCoopers LLP, working in its financial institutions audit group, before joining JPMorgan. Sally has been an investment manager in early-stage technology venture capital, co-founded an angel network and taken several C-suite roles in growth companies.

Sally is a non-executive director and the chair of audit for Mobeus Income & Growth VCT 2 Plc, the non-executive chair of StorMagic Ltd and a non-executive director of Molten Ventures VCT Plc.

Sally Macdonald (senior independent director)

Sally has around 37 years’ experience in asset management, of which seven were in UK markets and the balance in Asian markets. She was head of Asian equities at Marlborough Fund Managers until 2021.

Sally is a non-executive director of Fidelity Asian Values Plc and Evelyn Partners Fund Solutions Ltd. Her previous board experience includes the Royal College of Nursing Foundation.

Dr. George Olcott (chairman of the remuneration committee)

George has 15 years of investment banking and asset management business experience in Japan and Asia with SG Warburg/UBS, and has served on the boards of a number of listed Japanese corporations as an independent director (currently on the board of Kirin Holdings, and on the audit and supervisory board of Toyota Motor Corporation). He is a specially appointed professor and vice-president of Shizenkan University, and holds advisory roles at JR Central.

Anna Dingley (director)

Anna has a 25-year career spanning technology, finance and government sectors. She is the founder and managing director of Japan Connect Ltd, a Japanese business development consultancy which connects UK and Japanese entrepreneurs, investors, and executives. She is fluent in Japanese and was previously a trustee of The Japan Society in the UK.

Lord Jonathan Kestenbaum (director)

Jonathan has over two decades of private and public markets’ investing experience across asset classes. He is a non-executive Director of Windmill Hill Asset Management, and an adviser to a range of interests associated with the Rothschild family. Until 2022, he was the Chief Operating Officer at RIT Capital Partners, the publicly-quoted investment trust. Jonathan was born and spent his early childhood in Japan and has therefore taken an active interest in the country, its companies and markets throughout his professional career.

Previous publications

Readers may be interested in our previous publications on JFJ, which are listed in Figure 24 below. These are available to read on our website or by clicking the links in the table.

Figure 24: Previous publications

Source: Marten & Co

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Governing Law and Jurisdiction: These terms and conditions and all matters connected with them, are governed by the laws of England and Wales and shall be subject to the exclusive jurisdiction of the English courts. If you access this note from outside the UK, you are responsible for ensuring compliance with any local laws relating to access.

No information contained in this note shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction.

Investment Performance Information: Please remember that past performance is not necessarily a guide to the future and that the value of shares and the income from them can go down as well as up. Exchange rates may also cause the value of underlying overseas investments to go down as well as up. Marten & Co may write on companies that use gearing in a number of forms that can increase volatility and, in some cases, to a complete loss of an investment.