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
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Overview

CC Japan Income & Growth (CCJI) is managed by Richard Aston, who has a dual mandate of generating income and capital growth. Although CCJI is the only equity income strategy in the AIC Japan sector, Richard aims to find a balance between investing in quality growth opportunities and providing shareholders with attractive levels of income. In fact, as we highlight in the Portfolio section, CCJI’s portfolio is currently more expensive than its benchmark and has higher quality characteristics while still generating a higher yield.

Given CCJI holds cyclical and less growth-oriented stocks relative to many of its peers, it has been able to produce strong near-term Performance. By capitalising on the tailwinds of the post-pandemic recovery it has outperformed both its peers and benchmark over the last 12 months, and it has also now outperformed its benchmark over the last five years.

CCJI continues to offer investors arguably the most attractive income profile of the AIC Japan sector, with a current yield of 3.1%. As we discuss in the Discount section, CCJI’s yield is not only attractive because of its sector-leading figure but also because of the resilience Japanese companies have displayed in maintaining their dividend payments during the pandemic.

CCJI has also seen its discount narrow in recent months, and currently trades on a 11.1% discount. We cover this in more detail in the Dividend section, where we also outline the recent subscription share offering.

Analyst's View

We believe CCJI offers investors an effective balance between growth potential and a compelling dividend. While Richard’s valuation-sensitive approach and avoidance of low-yielding companies prevented him from capitalising on the technology and e-commerce rally that followed the outbreak of the pandemic, we believe his current portfolio may be well positioned to benefit from the post-pandemic recovery. This is due to CCJI holding high-quality cyclical companies while also avoiding the lower-quality end of the cyclical/value names: companies which may have been able to capitalise on the initial vaccine rally but lack the long-term growth potential or stable dividends Richard values.

Regardless of the long-term growth potential CCJI may offer, we remind investors that those looking to access Japanese large-cap equities without compromising on yield may find CCJI to be the only effective option, given its unique status as the sole equity income strategy. This means that CCJI offers income investors a compelling diversification proposition, but also a resilient and consistent source of income thanks to its special reserve and strong underlying revenue.

While CCJI has already seen its discount narrow in recent months, there may be potential for it to narrow further, particularly if it can continue to sustain its recent trend of outperformance. Another potential catalyst could be if Japan’s corporate governance reforms continue to accelerate to the benefit of shareholders, with the forthcoming restructuring of the TOPIX Index being a near-term flashpoint, as we outline in the Portfolio section.

bull bear
Potential to outperform thanks to exposure to global recovery
Valuation sensitivity and income objective may lead to underperformance in a growth-stock rally
Sector-leading dividend yield
Structural gearing can enhance losses on the downside
Although the discount has begun to narrow, it may still reflect a good entry point
Relatively slow vaccine roll-out may impact Japanese equities in the near term
Continue to Portfolio

Fund History

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…
21 Jan 2022 Investing in Japan using investment trusts
How investment trusts can help you invest in Japanese stocks…
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 Bullseye
The third arrow of Shinzo Abe's grand plan, corporate reform, could have significant implications for undervalued Japanese equities...
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...
View all

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