The Manager, Eiji Saito, commented:
“Japanese equity markets registered further gains in March 2021. Japanese stocks rose as expectations heightened for more widespread vaccinations leading to the relaxation of lockdowns and US stimulus policies.
The portfolio slightly underperformed the benchmark.
Over the month, low-growth value stocks continued to outperform at the expense of growth quality stocks, which was a headwind to our strategy.
Over the month, our overweight positions in Benefit One (fringe benefit provider), Atrae (job site), Mercari (online flea market operator) and RAKSUL (B2B platform builder) detracted value. Our overweight positions in Nittoku (motor coil winding machine maker) and Nohmi Bosai (fire alarm systems), on the other hand, added value as their share prices strongly advanced. We continue to invest in companies that have strong economics with sustainable competitive advantages.
Looking ahead, Eiji noted, corporate earnings are visibly recovering. In Japan, while Covid-19 has continued to weigh on economic activities, and the speed of vaccine roll-out is much slower than 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 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, who stand to benefit 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.