AVI Japan Opportunity (AJOT)

AVI Japan Opportunity Trust (AJOT) continues to do what it has done since launch in October 2018, with Joe Bauernfreund and the team at Asset Value Investors (AVI) building meaningful stakes in overcapitalised Japanese smaller companies and working closely with management to unlock value (see Portfolio). The difference now is scale, following the combination with Fidelity Japan (FJV) in November 2025, alongside potentially greater resources garnered through AVI's acquisition by Pacific Asset Management, though AVI has been clear that the investment team and process will remain unchanged.

Over the long term, this approach has served investors well, delivering an annualised NAV total return of 9.9% since launch, ahead of 7.8% for the MSCI Japan Small Cap Index. And most recently, the trust received a fresh reminder of what its patient approach can deliver, when a private equity firm launched a tender offer for Sharingtechnology, AJOT's largest holding, at a 55% premium to its undisturbed share price. Performance has been tested at times, including the past 12 months, as narrow, AI-led market leadership and a long wait for a corporate event weighed on relative returns (see Performance).

Amid the volatility this year, the team has been active within the Portfolio. Raito Kogyo was sold on share price strength, whilst Rohto Pharmaceutical was exited after the team saw limited prospects of a near-term catalyst. The proceeds have been recycled into names such as Taki Chemical. Engagement continues to bear fruit elsewhere, with Mitsubishi Logistics announcing strategic shareholding sales, a new buyback and board changes this year. The FJV combination has also brought a lower, tiered management fee (see Charges).

AJOT currently trades on a 4.8% Discount, wider than its five-year average of 1.9%. AJOT has been awarded a Kepler Growth Rating for 2026.