Fidelity Japan Trust PLC (LON:FJV) published its monthly factsheet for the period ended March 2025.
Portfolio Manager Commentary
Japanese stocks were little changed in March and lost ground during the first quarter as concerns that US trade policies would constrain global economic activity intensified. The US administration’s move to impose a 25% tariff on imported vehicles and parts precipitated a sharp sell-off in risk assets and the Nikkei 225 Index suffered its worst quarter since the onset of the COVID pandemic in early 2020. A stronger yen exacerbated downward moves in export-oriented names, with Japan’s currency briefly touching 147 against the US dollar. At a sector level, external-oriented manufacturers faced headwinds from the threat of US tariffs and a stronger yen. Conversely, financials, led by insurance and banks, and companies tied to domestic demand were among the standout performers.
In the current environment, there is the potential for domestic mid and small caps to outperform against a backdrop of heightened external risks, centred on US trade policies. Valuation multiples have already compressed to historical lows and this segment of the market is relatively resilient to tariff uncertainty. Meanwhile, Japan-specific drivers, such as domestic reflation and rising wages, and governance reforms represent multiyear structural trends that are creating new investment ideas.
Over the 12 months to 31 March 2025, the Trust recorded NAV and share price returns of -8.3% and -7.8% respectively, compared to -2.5% for the index.
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.
