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Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by CC Japan Income & Growth. 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
CCJI’s differentiated investment approach has led to sector-leading performance…
Overview

CC Japan Income & Growth Trust (CCJI) was launched in December 2015 in response to the rising opportunities coming from Japan’s corporate governance reforms, which aim to better Japanese companies’ focus on capital efficiency and shareholder returns. Richard Aston has been at the helm since the beginning and has cultivated an investment process which aims to capitalise on these reforms, focusing on delivering total returns through a combination of capital and income growth (see Portfolio). This approach sets it apart from most peers in the AIC Japan sector, which tend to be more stylistically growth-oriented strategies and this differentiation has been integral to CCJI’s long-term outperformance of both the peer group and index (see Performance).

Over the last 12 months, Richard has found more opportunities in the small- and mid-cap space. This part of the market has been under pressure over the last few years so he finds valuations attractive. Moreover, improvements from corporate governance reforms are starting to trickle down the market cap scale, so he argues growth prospects look brighter too. As a result, he has initiated positions in Nareru, a provider of engineering outsourcing services and Mani, a manufacturer of medical equipment.

As part of delivering a strong total return, CCJI aims to offer investors an attractive income profile. Since inception, CCJI has an unbroken track record of consecutive annual Dividend increases leading to a compound annual growth of 8.5% and a fully covered dividend yielding 2.7%, the highest in the AIC Japan sector and above the TOPIX’s yield of 2.0%.

CCJI has been awarded a Kepler Income & Growth rating for 2024.

Analyst's View

We think CCJI is a differentiated trust in the sector, backed by an experienced manager with a proven approach to investing in Japanese companies. Its dual objective of pursuing strong total returns, with both capital and income growth as key components, sets it apart from its growth-oriented peers (see Portfolio).

We think that CCJI is also a compelling option for investors seeking a diversified source of income in Japan. Richard targets companies displaying consistent and growing returns to shareholders, avoiding those that are heavily indebted or unable to demonstrate dividend stability or growth. This focus has led to an unbroken track record of Dividend increases since launch. CCJI also has the potential to deliver income resilience in periods of market stress, partly thanks to its substantial reserves, as well as a yield premium to the market and the highest yield in the AIC Japan sector.

The outlook for Japan is one of optimism, driven by the emergence from a deflationary environment and the positive impact of corporate governance reforms. Richard believes the latter has resulted in more interest from foreign investors as well as tangible improvements from domestic companies, arguing the improvements are now also spreading out through the small- and mid-cap companies he invests in. Richard’s expertise here positions him well, in our view, to take advantage of the opportunities. A mixture of low valuations, long-term structural changes, and the welcome return of modest inflation, paint an encouraging economic outlook and potentially exciting environment to invest in.

Bull

  • Long-term outperformance driven by manager’s stock selection
  • Strong dividend growth potential, with dividends in Japan boosted by corporate governance reforms
  • A core focus and desire to achieve dividend income combined with capital growth differentiates it from the peer group

Bear

  • Use of gearing can magnify the losses in a market downturn
  • Trust may underperform during deep-value stock rallies
  • While offering a greater return potential, having a greater exposure towards mid- and small caps can increase risk
Continue to Portfolio
2024 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

01 May 2024 From riches to rags to riches, is this time really different for Japan?
Japan’s decade-long corporate governance push is finally leading to significant improvements to underlying Japanese businesses…
17 Apr 2024 Fund Analysis
CCJI’s differentiated investment approach has led to sector-leading performance…
09 Apr 2024 The opportunity in Japan, with CCJI's Richard Aston - Podcast: Trust Issues #28
We discuss policy changes, small and mid-caps, and Richard's approach to valuations...
08 Mar 2024 Investing in Japan with investment trusts
Closed-ended funds offer an attractive way to access the Japanese stock market…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
03 Jan 2024 Probably better asking an octopus
Our investment trust experts uncurl a tentacle each and choose their ‘top picks’ for 2024…
05 Oct 2023 Fund Analysis
CCJI leads the performance tables in Japan over one, three and five years…
27 Sep 2023 Ohayō Japan!
Our analysts discuss what they think may be a new dawn for the Land of the Rising Sun...
14 Jul 2023 Japan’s value shift
Global equity funds are upping exposure to Japan…
06 Apr 2023 Interview with CC Japan Income & Growth's manager Richard Aston
We discuss why Japan has so many opportunities for income investors...
15 Feb 2023 Lost in translation
We argue Japanese equities look attractive on both a short and long-term view…
15 Feb 2023 Fund Analysis
CCJI is an attractive ‘buy and hold’ strategy…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
12 Oct 2022 The Buck stops where?
The US dollar has surged in 2022, but many are questioning whether this can be sustained...
07 Sep 2022 Fund Analysis
By focussing on Japan’s corporate leaders, CCJI’s performance has led the AIC Japan sector over both one and five years…
19 Aug 2022 Every silver lining has a cloud
A recent bounce back in equities may be hiding wider problems for investors…
06 May 2022 The Land of the Falling Yen
A cheaper currency is unlikely to change long-term trends in Japan…
20 Apr 2022 On the hunt
We review discounts in the investment trust space against a backdrop of harsh conditions...
02 Mar 2022 Fund Analysis
CCJI has outperformed its peers and the TOPIX index over the last 12 months, while offering a consistent source of income…
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
15 Sep 2021 Bargains galore
We review our discounted opportunities portfolio, with one constituent rallying more than 30% in just two months…
18 Aug 2021 Fund Analysis
CCJI has recently outperformed its peers and benchmark, while still being the highest-yielding trust in its sector…
14 Jul 2021 Grade inflation
We look at how our discounted opportunities portfolio has done in the first half of the year and update on the performance of our long-term rated funds…
02 Jun 2021 Fortune favours the brave (sometimes)
Our research suggests wide discounts often herald high NAV returns too…
05 May 2021 Vive la revolution
For thirty years quality has had a structural tailwind; but revolt is in the air and value is on the barricades…
14 Apr 2021 Wide Boys
We review our portfolio of chonky discounts as one star performer hits its target…
24 Mar 2021 Shoot to Thrill: ISA targets for long term growth
We all intend to invest for the long-term but can often be distracted by the news...
16 Mar 2021 Fund Analysis
Offering the highest yield in the sector, CCJI focusses on quality Japanese companies capitalising on corporate reforms...
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…
01 Oct 2020 Alternatives for Income Investors
Slides and audio from our event focused on alternative routes to a reliable income…
30 Sep 2020 Slides and Audio: CC Japan Income & Growth
View the presentation and listen to the audio from our 'Alternatives for Income Investors' event on 29 September...
20 Aug 2020 Alternatives for income investors
In a world where dividend are under unprecedented pressure, our income focused online event in September should provide serious food for thought…
13 Aug 2020 Underground bangers
We look for hidden gems in the smaller end of the investment trust universe...
29 Jul 2020 To be, or not to be (geared), that is the question
Gearing is part of the toolkit that trusts use to outperform OEICs. But how is it best implemented?...
30 Jun 2020 Fund Analysis
With the highest yield in its sector, CCJI aims to take advantage of long-term shifts in the way Japanese companies are managed...
05 Sep 2018 Fund Analysis
The strategy aims to take advantage of a secular shift towards shareholder-friendly policies, including dividends and buybacks, in corporate Japan...
05 Sep 2018 Bullseye
The third arrow of Shinzo Abe's grand plan, corporate reform, could have significant implications for undervalued Japanese equities...
View all

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