JPMorgan Japanese Investment Trust – Are we there yet?

Optimism driven by rapidly developing corporate governance reforms, a divergent economy cycle, and still-negative interest rates likely contributed to a dramatic rally in benchmark Japanese indices over 2023, with the TOPIX index climbing to its highest level in more than 30 years.

The managers note that with the rally driven by more value-focused sectors of the market, returns for the JP Morgan Japanese Investment Trust (JFJ) failed to keep pace for much of the year due to a portfolio more targeted towards high-quality growth stocks. While many of these companies have been out of favour, they believe that this should not be seen as significant negative for investors given the alignment of the portfolio towards a range of secular themes. Perhaps promisingly in December, we began to see an inflection, with the JFJ portfolio up strongly.

The manager adds that many of these companies continue to trade on increasingly attractive valuations, which it believes lays the foundation for significant upside down the track.