Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by abrdn Japan. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
A new version of this profile is available. View Latest
Overview

Aberdeen Japan Investment Trust (AJIT) is a Japanese equity strategy dedicated to investing in what the managers believe are the highest-quality companies in Japan. The team, based predominantly in Tokyo, implement a detailed investment process which exhaustively analyses a company’s overall quality, both in terms of conventional quantitative factors (such as having a high ROIC) but also in terms of the quality of management. We outline this further in the Portfolio section.

One of the important features of AJIT is its allocation to small- and mid-cap companies. A truly all-cap mandate, AJIT has an overweight to small and mid-caps compared to its benchmark, the TOPIX Index. Governance reform also plays a large role in AJIT’s investment process. The team actively engage with many of their holdings to promote policies conducive to better governance and shareholder returns, as we detail in the ESG section.

AJIT has performed remarkably well over 2020 in our view, with a one-year NAV return of 22% outperforming its benchmark’s 9.2% return and its peer group’s 19.8%. Returns have been helped by the strategy of buying high-quality companies, which allowed AJIT to weather the COVID-19 crisis better than the broader Japanese equity market, as shown by AJIT’s lower drawdown during the crash.

AJIT has recently adopted a new dividend policy, whereby it now pays out its dividend through a combination of revenue and capital, leading to a 278% increase in its dividend in the last (2020) financial year. It currently yields 2% on a historical basis. Like much of the Japanese equity peer group, AJIT trades at a discount, currently c. 7.9%.

Kepler View

We view AJIT as offering investors a consistent and reliable approach to Japanese equity investing, thanks to the managers’ clear focus on what they deem to be quality companies. While this quality bias has large overlaps with conventional market definitions, the team’s multifaceted investment approach also highly values a management team with a strong pedigree and a business with inherent competitive advantages.

This dedicated quality bias comes with advantages and disadvantages. The team’s dedication to quality should give investors confidence in the stability of the portfolio, but there will be periods where quality names come in and out of favour, and periods where AJIT’s performance will primarily be driven by the market cycle. However, this has been to its advantage over 2020, as its strong outperformance has been down to both the superior stock-picking of the team and also increased demand for high-quality companies that should be able to survive the pandemic.

We also believe that AJIT’s allocation to small caps is a distinct advantage. Not only does this improve the value-add of the managers by analysing thinly covered stocks, it also improves the diversification benefit of the trust in a manner dedicated large-cap strategies cannot. Thanks to the new dividend policy, AJIT may now be one of the few ways income-focussed investors can access high-quality Japanese companies without having to sacrifice income.

Bull
Bear
Dedicated quality bias with a focus on company management
Quality factor can fall out of favour, impacting performance
Small- and mid-cap allocation offers potential sources of alpha and diversification
The use of gearing can amplify losses
Recent changes to dividend policy greatly enhance its income potential
Higher OCF than the sector, due in part to its smaller size
Continue to Portfolio

Fund History

21 Dec 2022 Fund Analysis
AJIT’s focus on quality Japanese companies could be a source of strong returns as the world’s economy goes through a period of de-globalisation…
12 Oct 2022 The Buck stops where?
The US dollar has surged in 2022, but many are questioning whether this can be sustained...
06 Jun 2022 Fund Analysis
AJIT offers investors access to some of Japan’s highest-quality companies at a wide discount…
13 Oct 2021 Fund Analysis
AJIT trades on a wide discount despite recent strong performance…
18 Feb 2021 Fund Analysis
AJIT invests in high-quality Japanese equities, while paying a high dividend…
02 Dec 2020 Can you teach an old dog new tricks?
Cheap companies in Japan are drowning in what cheap companies elsewhere would kill for: buckets of cash…
19 Aug 2020 Fund Analysis
AJIT will continue to pay a considerably increased dividend yield relative to history...
27 Feb 2020 Robbing Peter to pay Paul?
Two of our analysts discuss the growing trend for companies to pay an income out of capital…
13 Feb 2020 Fund Analysis
AJIT’s dividend will be significantly higher going forward…
28 Nov 2019 Is there a generational opportunity in Japan?
Two of our analysts go head-to-head, arguing the case for Japan...
10 Jul 2019 Fund Analysis
The trust will offer a more substantial income this year than in the past...
22 May 2019 On a roll
As Western economies show signs of their own 'Japanification', we explore the Japanese industries poised to take advantage of this change...
04 Dec 2018 Fund Analysis
Aberdeen Japan aims to generate long-term capital growth from a concentrated portfolio of Japanese stocks...
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.