JPMorgan Japanese Investment Trust – Backing the new Japan

JPMorgan Japanese Investment Trust (JFJ) has a large exposure to companies that are focused on the modernisation of the Japanese economy. The portfolio embraces businesses in robotics, ecommerce, digitalisation, healthcare, and renewables. It also backs Japanese brands and businesses that its managers think are helping the economy adapt to an ageing population.

The majority of these stocks exhibit characteristics associated with growth stocks and, as we discussed in our last note, even though Japan has not, as yet, experienced the interest rate rises that appeared to trigger the selloff in growth stocks in other markets, their share prices have plunged, and this has impacted on JFJ’s performance.

The trust’s managers, Nicholas Weindling and Miyako Urabe, highlight the valuation opportunity that this has created; they say that Japan was out of favour before this fall, the stocks in the portfolio are cheaper yet still boast superior earnings growth prospects than the average Japanese company, and the yen is undervalued.