ATLANTIS JAPAN GROWTH FUND LIMITED 31 August 2023
ATLANTIS JAPAN GROWTH FUND
CUMULATIVE PERFORMANCE % (£) | YTD | 1M | 3M | 1Y | 3Y | 5Y | 2022 | 2021 | 2020 | 2019 | 2018 | ITD* |
AJG Price (total return) | 0.48 | 6.97 | 8.29 | 0.06 | -7.37 | -7.10 | -22.90 | -10.40 | 29.58 | 25.62 | -15.52 | 211.38 |
AJG NAV (total return) | -4.95 | -2.65 | -0.90 | -6.66 | -16.40 | -11.29 | -22.53 | -9.58 | 24.07 | 33.60 | -14.97 | 241.24 |
Topix Index (total return) | 7.10 | -1.00 | 2.13 | 6.22 | 17.58 | 18.00 | -4.45 | 2.14 | 8.73 | 16.05 | -8.85 | 89.52 |
Sources: | Northern Trust, Bloomberg and Quaero. The Fund's total return performance is calculated with dividends added back on ex-dividend date. |
Notes: | * Inception to date NAV return figure was converted to GBP based on the official USD NAV using Bloomberg FX rate. |
PERFORMANCE OVER 5 YEARS (£)
70% | |
60% | Altantis Japan Growth Fund (total return) - £ NAV |
Atlantis Japan Growth Fund (total return) - £ Price | |
50% | Topix Index (total return) - £ Price |
40% | |
30% | |
20% | |
10% | |
0% | |
-10% | |
-20% |
-30%
Aug 18 | Aug 19 | Aug 20 | Aug 21 | Aug 22 | Aug 23 |
Sources: | Northern Trust, Bloomberg and Quaero. The Fund's total return performance is calculated with dividends added back on ex-dividend date. | ||||
Notes: | The figures in the above table and chart refer to past performance which is not a reliable indicator of future results. An investment in the | ||||
Fund would place an investor's capital at risk. Figures shown are net of all fees. |
KEY FACTS
INVESTMENT OBJECTIVE
Aims to achieve long-term capital growth through investment wholly or mainly in listed Japanese equities.
FUND INFORMATION | |
Lead portfolio adviser | Taeko Setaishi |
Lead adviser start date | 01 May 2016 |
Total Net Assets (TNA) | GBP 77m |
Shares in issue | 40,726,070 |
Share price | 174.0p |
NAV per share | 189.3p |
Discount(-)/Premium | -8.1% |
Net gearing | 0.0% |
Active Share | 88.6% |
Inception date | 10th May 1996 |
ADMINISTRATIVE & DEALING INFORMATION | |
Financial Year End | 30 April |
Company Domicile | Guernsey |
Company Legal | UK Investment Trust |
Structure |
MANAGER'S COMMENTARY
Performance Review
The Atlantis Japan Growth Fund declined 2.65% MoM in August versus the benchmark Topix Total Return (TR) Index decline of
1.00% MoM in sterling terms. In Japanese yen, the fund declined 1.24% compared to a 0.43% increase for the benchmark. The yen weakened by 1.45% against the pound to JPY185.44/GBP.
In the first half of the month, the Japanese stock market weakened ahead of the US Jackson Hole Economic Symposium on Aug 24-25. This was on concerns of possible hawkish comments although they ended up within expectations. Apart from a brief rally mid-month following exceptionally strong results from US AI chip leader Nvidia, interest rate sensitive technology stocks declined while financials gained on expectations of a steepening yield curve with the 10-year JGB yield rising from 0.595% to 0.640%. The tech-heavy Nikkei Index closed down 1.7% for the month while the Topix index (more representative of broader market financials and cyclicals) gained 0.4% in local currency terms. Rising oil, natural gas and coal prices also supported a run-up in corresponding Mining and Oil & Coal sectors. As these tend to be lower valuation names, it
was not surprising to see value outperform growth once again, though the divergence between the two is narrowing. While interest rates rose in Japan, the yen nevertheless weakened because the spread between Japanese and US 10-year bond yields widened.
Sectors that outperformed included Retail Trade, Services, and Precision Instruments, while Electric Appliances, Information & Communication, and Insurance underperformed. Stocks that outperformed included second-hand jewelry, luxury watches and bags dealer Komehyo Holdings (2780 JP), semiconductor production equipment specialist Disco (6146 JP), call center operator BellSystem24 Holdings
(6183 JP), specialty gas and ultra-pure water for semiconductor production provider Japan Material Co (6055 JP), and creative content creator niche staffing company Creek & River (4763 JP). Stocks that underperformed included warehouse automation system provider Daifuku Co (6383 JP), insurance sales services provider FP Partner Inc (7388 JP), cosmetics manufacturing and distributor AXXZIA (4936 JP), electric motor leader Nidec (6594 JP), and software testing pioneer Shift Inc (3697 JP).
Listing | London Stock Exchange |
Valuation | Daily |
Company Broker | Singer Capital Markets |
Depositary | Northern Trust |
Administrator | Northern Trust |
Auditor | Grant Thornton |
Investment Manager | Quaero Capital LLP |
Investment Adviser | Atlantis Investment |
Research Corporation | |
DIVIDEND | |
12 months dividend yield | 3.7% |
Quarterly interim paid | March, June, |
September and | |
December | |
COMPANY FEES & EXPENSES | |
Ongoing Charges* | 1.85% |
Annual Management Fee | 1.00% up to £125m |
0.85% between £125m-£175m | |
0.70% greater than £175m | |
FUND CODES | |
Bloomberg | AJG LN |
SEDOL | B61ND55 |
ISIN | GG00B61ND550 |
- Based on the Company's Annual Financial Statements to
30 April 2023.
Quaero Capital LLP | 2-4 King Street, London SW1Y 6QL | +44 (0)20 7747 5770 | enquiries.uk@quaerocapital.com | www.atlantisjapangrowthfund.com |
Investment Activity
At the end of August, the Fund held 46 stocks, down from 50 the previous month, with the reduction in holdings occurring in Electrical Appliance and Services sectors. As a percentage of holdings, the top 10 accounted for 33.22%, up slightly from 32.19%. Two new names in the top 10 were BellSytem24 Holdings (6183 JP) and automotive components provider Denso (6902 JP); reflecting share price gains subsequent to their earnings reports. Our exposure to the Electrical Appliance sector declined from 11.66% to 8.87% and in the Real Estate sector from 11.71% to 9.69%, as positions were adjusted in the portfolio.
The Fund is fully invested in equities and does not hold bonds nor derivatives and the currency is not hedged.
Outlook
Over the course of the pandemic, Ukraine war and China-US realignment, both the real-economy and financial markets have gone through significant changes. In the real economy, subsidies and large investments in strategic sectors such as semiconductors distorted normal supply / demand cycles resulting in inventory build ups such as in consumer electronics that are still being worked out. Recovering inbound tourism and pent-up demand supported rising retail and department store sales while inflation has been hindering household spending. In the stock market, certain sectors such as digital transformation plays experienced re-opening bubbles distorting stock price levels. The pandemic also ushered in a large shift in market style from growth to value which was
exacerbated by initiatives such as the TSE requesting Prime Section companies trading under book value to submit plans for improvement, resulting in widespread buying of low PBR stocks irrespective of the quality of their underlying businesses.
In the meantime, keeping in mind that geopolitical tensions could change, there is a growing sense that we are closer to the peak of the interest rate and inflation cycle and nearer to the bottom of the hardware manufacturing cycle. Market focus seems to have shifted from concerns about Central Bank policy to questions about how bad the economic slowdown in China could get, although this is being mitigated by recent stimulus measures. Inbound tourism continues to recover and is back to about 80% of pre-Pandemic levels. Auto production is also recovering as supply chains normalize, and the banking sector is focusing on improving spreads and margins after the BoJ's YCC range was widened. Wages have also increased and companies are gradually raising prices leading to a return of rational expectations of higher prices among consumers in general. Japanese companies have also had a relatively strong Q1 FY23 earnings season and are well positioned financially.
Within this environment requiring a balanced view, we are starting to see a narrowing of the divergence between growth and value at the individual stock level. We expect to see a return to core investment values in search of well-run companies with long-term structural earnings growth potential, which in turn will yield positive returns.
PORTFOLIO STATISTICS
MARKET EXPOSURE | 93.1% |
TOP 10 HOLDINGS | (% TNA) |
Disco | 4.7 |
Komehyo Holdings | 4.1 |
Sumitomo Mitsui Financial | 3.5 |
FP Partner | 3.5 |
Japan Material | 3.3 |
Shin-Etsu Chemical | 3.1 |
Bellsystem24 Holdings | 3.1 |
Mitsui & Co | 2.9 |
Internet Initiative Japan | 2.9 |
Denso | 2.8 |
SECTOR BREAKDOWN | (% TNA) |
Consumer Discretionary | 11.2 |
Consumer Staples | 2.8 |
Financials | 12.6 |
Health Care | 4.3 |
Industrials | 27.4 |
Information Technology | 26.4 |
Materials | 3.1 |
Real Estate | 2.4 |
Communication Services | 2.9 |
MARKET CAPITALISATION | (% TNA) |
> 10bn | 27.4 |
5-10bn | 2.7 |
2-5bn | 8.3 |
0.5-2bn | 22.6 |
< 0.5bn | 32.2 |
CONTACTS
INVESTOR RELATIONS
Contact: | Henry Pollard |
Phone: | +44 (0)20 7661 0887 |
Email: | h.pollard@quaerocapital.com |
FUND BROKER | |
Contact: | James Waterlow |
Phone: | +44 (0)20 7496 3031 |
Email:James.Waterlow@singercm.com
KEY RISKS
- Past performance is not a reliable indicator of future results. The value of your investment may go down as well as up and you may not get back the amount originally invested.
- The Fund may be invested in securities denominated in currencies other than Sterling. Changes in exchange rates may cause your investment to decrease or increase in value.
- The Fund, as an investment trust, is a public limited company, the shares of which are traded on the London Stock Exchange. Investment trusts are not authorised and regulated by the Financial Conduct Authority.
- Investment trusts may borrow money in order to make further investments. This is known as 'gearing' or 'leverage'. The effect of gearing can enhance returns to shareholders in rising markets but will have the opposite effect on returns in falling markets.
- The Fund may invest in smaller companies which are generally considered to carry a higher degree of risk as the market for their shares is often less liquid than that for larger companies.
- An investment trust's exposure to a single market and currency may increase the level of risk.
Quaero Capital LLP | 2-4 King Street, London SW1Y 6QL | +44 (0)20 7747 5770 | enquiries.uk@quaerocapital.com | www.atlantisjapangrowthfund.com |
IMPORTANT INFORMATION
This newsletter is prepared on behalf of Atlantis Japan Growth Fund Limited (the "Fund") by Quaero Capital LLP ("Quaero"), which is authorised and regulated by the United Kingdom Financial Conduct Authority ("FCA") with registered number 434203. Quaero is registered in England & Wales under number OC314014 and has its registered office at 2-4 King Street, London SW1Y 6QL. This newsletter does not constitute an offer of or solicitation to buy shares in the Fund ("Shares"). The key information document ("KID") contains detailed information on risk factors and fees that may apply and should be read carefully before investing. No investment decisions should be made without first reviewing the KID (available in English) for the Fund which can be obtained from www.atlantisjapangrowthfund.com or requested directly from Quaero via email at InvestorServices.uk@quaerocapital.com or by calling us on +44 (0)20 7747 5770.
This newsletter is being communicated by Quaero only to persons who qualify as (a) eligible counterparties, (b) professional customers or (c) exempted recipients under any of the exemptions to section 21 of the United Kingdom Financial Services and Markets Act 2000 (FSMA). Investors in the Fund will be shareholders in the Fund and not customers of Quaero. As such they are advised that in respect of an investment in the Fund they will not generally benefit from the protection of FSMA and provisions made thereunder or the United Kingdom Financial Services Compensation Scheme and will not have access to the United Kingdom Financial Ombudsman Services in the event of a dispute. Past performance is not necessarily a guide to the future performance. The value of Shares in the Fund and the income derived from them may go down as well as up. Changes in rates of exchange may be one of the causes of the value of investment in the Fund to go up and down. This newsletter is written for the benefit of the category of persons described above. It is not addressed to any other person and may not be used by them for any purpose whatsoever. It expresses no views as to the suitability of the investments described herein to the individual circumstances of any recipient.
Copyright Quaero Capital LLP 2023. All rights reserved.
Quaero Capital LLP | 2-4 King Street, London SW1Y 6QL | +44 (0)20 7747 5770 | enquiries.uk@quaerocapital.com | www.atlantisjapangrowthfund.com |
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Atlantis Japan Growth Fund Ltd. published this content on 12 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 September 2023 10:13:07 UTC.
