Japan Growth & Income fund JSGI outperforms benchmark in April

JPMorgan Japan Small Cap Growth & Income plc (LON:JSGI) published their ‘month in review’ for April 2021. 

The Portfolio Manager, Eiji Saito, commented:

Japanese equities declined in April 2021 after six months of gains, with the TOPIX returning -2.9% in JPY terms. Concerns over rising Covid-19 infection numbers in Tokyo and Osaka and the negative impact on the economy weighed on market sentiment.

The portfolio slightly outperformed the benchmark. Both sector allocation and stock selection added value. At the sector level, overweighting the software & services sector and underweighting the banks sector added value.

At the stock level, the top positive contributors were our overweight positions in Money Forward and CyberAgent. Money Forward’s share price advanced on the back of positive business results announced during the month. CyberAgent’s share price further accelerated as the company reported very strong earnings driven by hit game Uma Musume. It exceeded its full-year operating profit forecasts and has raised full year guidance for revenues.

Our overweight position in S-Pool, on the other hand, detracted value. S-Pool operates farms in Chiba, Aichi and Saitama for people with mental/intellectual disabilities. While demand for their business remains strong, the stock suffered from profit taking after a period of strong performance.”

Looking ahead, Eiji noted, Corporate earnings are visibly recovering. Although Covid-19 has continued to weigh on economic activities, and the speed of vaccine programme roll-out is much slower in Japan than it is some other developed countries, the level of restrictions on business activities remains much milder than in other developed countries due to a significantly lower infection rate.

On the ground in Japan, we see that the situation around Covid-19 has been accelerating structural changes that were already taking place, especially in the area of automation and information technologies. The trends provide many interesting investment opportunities for bottom-up investors, benefitting from the structural changes taking place in the country.

Japan income fund, JPMorgan Japan Small Cap Growth & Income plc (LON:JSGI / JSGI.L), targets Japan income without compromising on Japanese growth opportunities. This Japan fund is an income investing opportunity that gives investors access to a diverse and fast growing sector managed by local managers. The Investment Trust offers a regular quarterly income by paying a higher dividend funded part by capital reserves as well as revenue returns.

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