JPMorgan Japanese

JFJ continues to be at the heart of Japan’s new growth, with a portfolio of quality growth stocks that has delivered long term outperformance…

Add to watchlist Download View key data

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by JPMorgan Japanese. 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.

JPMorgan Japanese
2021 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler for growth... Find out more

JPMorgan Japanese (JFJ) continues to offer investors a portfolio of Japanese equities picked through bottom-up stock picking. Run by Nicholas Weindling and Miyako Urabe, with Nicholas recently passing his ten-year anniversary as manager, the portfolio is made up of quality growth stocks across the market capitalisation spectrum, leveraging heavily on the managers’ understanding of Japan’s secular trends. Portfolio companies are often at the forefront of the solutions to Japan’s demographic issues and environment challenges, or simply offer some of the fastest growing prospects amongst Japan’s major brands or in the digitisation and automation sectors.

Thanks to its quality growth bias, JFJ has been able to generate very strong performance over 2020, capitalising on the momentum behind the COVID-19 ‘winners’ like ecommerce and online services. However, 2021 so far has seen a wider rotation out of quality growth and into recovery and value stocks, companies which often lack the long-term structural growth opportunities of JFJ’s holdings. Despite a brief period of underperformance from the start of 2021, JFJ has outperformed the AIC Japan peer group average and its benchmark over the longer term.

JFJ continues to have exceptionally strong ESG credentials, having been rated as high by Morningstar (placing it in the top 10% of its peers). This rating can be attributed in part to the team’s understanding of the governance issues plaguing many Japanese companies, as well as their recent investments in a renewable energy provider, a new ‘environmental’ thematic allocation for JFJ. JFJ has the lowest OCF in the sector, at 0.65%.

Analyst's View

In our view JFJ continues to offer one of the best ways to tap into the domestic Japanese market, investing at the heart of Japan’s new growth opportunities. The team have a strong track record of successfully identifying the major secular trends driving the economy, which has translated to five years of outperformance of both the AIC Japan peer group and benchmark. While it has underperformed in the near term, this is probably an unavoidable consequence of quality growth investing and JFJ’s managers remain confident that their long-term view to secular growth investing will return to outperformance, an opinion also held by us.

Over the years JFJ has largely remained consistent in the sectoral trends which underpin its portfolio, though we are excited by its recent addition of an environmental theme. Not only does it further enhance JFJ’s already strong ESG credentials, but it also is evidence of the flexibility of the team and their awareness of the changing market environment in both Japan and abroad, especially important as we enter a post COVID-19 economy.

Investors should be conscious that the combination of a high level of gearing, exposure to small cap stocks, and a clear quality growth bias can enhance JFJ’s volatility. This has played out recently with the market’s rotation into value and cyclical stocks at the expense of quality growth as it begins to price in a post-pandemic recovery, enhancing the downside volatility for JFJ. However we believe JFJ’s returns more than compensate for its risk, with JFJ having the highest Sharpe ratio of its peers over the last three years and below average beta.

Bull
Bear
Dedicated to investing in the secular growth trends underpinning the Japanese economy
Has recently underperformed due to rotation into value and cyclical stocks
Long-term track record of outperformance
The use of gearing can amplify losses
Well-resourced team located in Tokyo, providing invaluable local knowledge
A failure of one sectoral factor to materialise will impact multiple holdings
David Johnson
David is an investment trust analyst and joined Kepler in September 2020. Prior to this he ran multi-asset model portfolios at a discretionary fund manager, and has worked in both asset management and investment banking during his career. He holds a Masters in Finance from the University of Warwick and is a CFA charterholder.

Fund History

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.

Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
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.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. 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}}
?
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}}
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}}
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.