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 has outperformed its peers and the TOPIX index over the last 12 months, while offering a consistent source of income…
Overview

CC Japan Income & Growth Trust plc (CCJI) invests in Japanese equities, with a focus on both capital and income growth. The investment trust was launched in 2015 under the management of Richard Aston, who is supported by Jonathan Dobson and Megumi Takayama. CCJI is designed to capitalise on Japan’s programme of corporate governance reforms, which have seen increasing alignment between the interests of company management and shareholders, with dividend payments also increasing as a result. At its core is a portfolio of quality companies which are able to generate growth in their underlying cash flows from strong balance sheets, allowing them to offer attractive dividends. We outline the team’s process in the Portfolio section.

CCJI has been able to generate strong long-term Performance, beating both the TOPIX TR index and the AIC Japan peer group over the last five years. This is in part thanks to its 12-month performance. Over the year CCJI has been the best-performing strategy within its peer group, and one of the few investment trusts to generate a positive return.

CCJI is also the only trust within its peer group to have a dedicated income objective, and as such its current 3% dividend yield is the highest amongst its peers. The Dividend profile of Japanese companies has also been a long-term advantage for CCJI, as not only has it been able to continually grow its payout since inception, but it also avoided the painful loss in dividend revenues suffered by the UK market during COVID-19. CCJI currently trades on an 6.8% Discount, in line with its peer group’s average but wider than own long-term average discount.

Analyst's View

CCJI offers attractive characteristics for both income- and growth-focussed investors. The unique situation in Japanese equity markets, namely the ongoing corporate governance reform programme, means that CCJI’s holdings are able to generate an attractive yield as well as a strong source of dividend growth. The Japanese market gives manager Richard Aston the flexibility to avoid many of the conventional income sectors that UK investors may be accustomed to, providing an attractive source of diversification.

Richard remains focussed on identifying quality companies which also have dividend growth potential, and has not compromised on this or the underlying earnings growth. This means CCJI also offers a potential ‘core’ investment in Japan, avoiding strong biases to either growth or value. Such an approach has been helpful over the last 12 months as Japan, like many other markets around the world, has seen strong style rotations. Yet CCJI has kept its head above water over the last 12 months, having been one of only two investment trusts in its AIC Japan peer group to generate a positive return, and generating the best performance of the peer group.

If the current inflationary environment continues, then CCJI’s approach may continue to see tailwinds to the investment trust’s relative performance. We believe such an occurrence would also make CCJI’s currently wide discount an attractive entry point, especially considering it is much wider than the growth-focussed strategies in its peer group, which are struggling in the current environment.

Bull

  • History of both consistent and growing dividends
  • Offers diversification for income investors on both style and sector metrics
  • Demonstrated strong outperformance during recent down-markets

Bear

  • Can underperform during strong growth-stock rallies
  • Structural gearing can enhance losses on the downside
  • While resilient, Japanese yields are below those of global peers
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 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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