According to the company’s half-yearly financial report ending on 30 April 2022, the Tokyo Stock Exchange Price Index (TOPIX) total return fell 7.8% over the period, while the trust’s share price total return fell by 3.7%.
The trust, managed by Richard Aston at Coupland Cardiff, delivered a share price total return of 24% for the same period in 2021, while the TOPIX returned 8.8%.
“Another Covid-19 lockdown to tackle the Omicron variant during the first half of our financial year further delayed the reopening of the domestic economy,” said chair Harry Wells.
“Given these conditions, discounts to NAV have tended to widen across the peer group with our discount closing at 9.8% as of 30 April 2022, compared to 6.9% as at the financial year ended 31 October 2021. The discount has averaged 7.6% over the six months to 30 April 2022.”
Momentum Multi-Asset Value continues to deliver ‘mediocre’ performance
Over the 12 month period to 30 April 2022, the cum income NAV rose by 7.1% and the Ordinary Share price rose by 3.5%, while the TOPIX total return fell by 5.1%.
The share price has dropped to 145.3p from 154p on 31 October 2021, while the net asset value per share has fallen from 165.4p to 161.1p.
“The period under review has seen a dramatic reversal of the underlying characteristics of companies leading the performance of the Japanese equity market. Similar trends can be identified across equity markets worldwide and have been simplified to an outperformance of ‘value’ over ‘growth’,” said Aston.
The trust’s financial, wholesale and telecommunications sector holdings contributed to positive performance over the period, while the reintroduction of the quasi-state of emergency in December 2021 took a toll on companies such as Technopro and Open House.
In his outlook for Japanese equities, Ascot argued that in the near term, investors will continue to focus on the “knock-on” effects to Japan of a number of international developments, such as the sharp fall of the Yen against other currencies.
However, he said that these “shorter-term” economic developments should not distract investors from the “real and fundamental improvements” in corporate governance and shareholder return.
“Corporate adherence to the more favourable shareholder paradigm encouraged under former Prime Minister Abe has been evident in the resilient performance during the last two years and the rapid return to growth of both dividends and share buybacks to complement business growth strategies offers an exciting investment backdrop,” he said.