Fidelity Japan Trust PLC (LON:FJV) published its monthly factsheet for the period ended 30th April 2023.
Portfolio Manager Commentary
The Trust recorded NAV returns of 7.4% over the 12 months to April 2023, outperforming the reference index, which returned 5.8%. The discount to NAV widened over the same period and the Trust’s share price returned 4.1%.
Positive stock picking in the chemicals and precision instruments sectors was a key driver of the Trust’s outperformance over the period. Key active positions in global industry leaders, complimented by reopening names and technology-related cyclicals, ranked among the standout contributors to performance.
At a sector level the underweight exposure to automobiles supported relative returns. Conversely, holdings in software companies were the most significant detractors. Given that the rise in US interest rates is losing steam, the Chinese economy is recovering and the manufacturing cycle is bottoming out, we are seeing opportunities in early tech cyclicals. Japanese retailers and consumer product companies that have a high earnings contribution from China stand to benefit from the country’s reopening. Related to this, a further recovery in inbound demand, including the return of Chinese tourists, will benefit retailers and various hospitality industries. Meanwhile, reforms aimed at enhancing capital efficiency are gaining traction, with regulators detailing new requirements and calling for fast implementation. Against this backdrop, we are seeing a positive shift among growth companies utilising excess cash to improve shareholder returns.
Fidelity Japan Trust PLC (LON:FJV) aims to be the key investment of choice for those seeking Japanese companies exposure. The Trust has a ‘growth at reasonable price’ (GARP) investment style and approach – which involves identifying companies whose growth prospects are being under-appreciated or are not fully recognised by other investors.
