ATLANTIS JAPAN GROWTH FUND LIMITED 30 September 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 | 0.00 | 4.74 | 9.02 | -19.65 | -6.27 | -22.90 | -10.40 | 29.58 | 25.62 | -15.52 | 211.38 |
AJG NAV (total return) | -5.63 | -0.72 | -3.80 | 0.61 | -27.47 | -11.90 | -22.53 | -9.58 | 24.07 | 33.60 | -14.97 | 238.79 |
Topix Index (total return) | 9.60 | 2.34 | 2.99 | 14.89 | 14.26 | 17.52 | -4.45 | 2.14 | 8.73 | 16.05 | -8.85 | 93.95 |
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%
Sep 18 | Sep 19 | Sep 20 | Sep 21 | Sep 22 | Sep 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 | 187.9p |
Discount(-)/Premium | -7.4% |
Net gearing | 0.0% |
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
During the month of September, Atlantis Japan Growth Fund declined 0.72% MoM versus the benchmark Topix Total Return (TR) Index gain of 2.34% MoM in sterling terms. In Japanese yen, the fund declined 2.49% compared to a 0.51% increase for the benchmark. The yen strengthened by 1.79% versus sterling to ¥182.13/GBP.
The Japanese equity market rallied in the first 2 weeks of the month to its highest level since March 1990 as expectations of further US rate hikes receded. However, rising oil prices to above $90/bl and a strong US labour market reignited inflationary concerns and were followed by hawkish comments from the US Fed suggesting a "high for longer" stance. Both US treasury bond yields and Japanese JGB yields also continued to rise sharply, and the equity market gave back most of its gains for the month ending fairly close to where it started. In particular, the higher US bond yields contributed to the Topix Value TR Index (+5.22% MoM) significantly outperforming the Topix Growth TR Index (-0.80% MoM) in sterling terms. Concerns over the Chinese economy also eased on expectations of possible stimulus measures. Although the yen firmed slightly against sterling as noted, it continued to weaken against the US dollar from ¥145.54/$
at the end of Aug to ¥149.37/$ at the end of September, thus heightening expectations of possible intervention to prevent further weakening. Within this environment, interest rate sensitive financial sectors and resource related oil and mining sectors outperformed along with the currency sensitive transportation equipment (i.e., auto) sector.
Sectors that outperformed for the Fund included Banks, Nonferrous Metals and Textiles & Apparel while those that underperformed included Services, Electric Appliances, and Insurance reflecting the weakness in growth related names relative to value. Stocks that outperformed included Sumitomo Mitsui Financial Group (8316 JP), one of Japan's mega banks, Tri Chemical Laboratories (4369 JP), a maker of semiconductor and optic fibre materials, and SWCC Corp (5805 JP), a wire and cables producer. Stocks that underperformed included Japan Material Co (6055 JP) a supplier of specialty gases, ultra-pure water, chemicals and related piping infrastructure for semiconductor manufacturers, Recruit Holdings (6098 JP) a leading digital marketing media and human resource technology and staffing company, and FP Partner Inc (7388 JP), a consolidator of Japan's fragmented insurance agency sector.
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 | 4.8% |
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
The Fund held 36 stocks at the end of September, down from 46 the previous month. The top 10 holdings weighting also declined from 33.22% to 29.04%, and the cash position was increased from 2.52% to 28.72% of NAV as part of a controlled reduction of positions relating to the Fund transitioning to new management. The Fund's top three holdings included Disco (6146 JP) a semiconductor production equipment specialist known for its defensive qualities as a provider of consumable grinders and cutters, Sumitomo Mitsui Financial Group (8316 JP), and FP Partner (7388 JP) which are relatively well-suited to the current market environment of rising interest rates and macro-economic uncertainty.
Outlook
On the corporate earnings front, TSE Prime Section companies (excluding financials) according to Toyo Keizai estimates saw 1H FY23 sales (ending in September) rise 3.1% YoY and recurring profits declining 0.3% due to ongoing inventory corrections and the weak Chinese economy. However, there was a high comparison basis distorted by the post-Covid recovery last year. For the full year of FY23, sales are expected to rise
2.4% and recurring profits by 5.7%. In terms of the macro-economy, indicators have been mixed, with industrial production -3.8% MoM in August while retail sales rose +7% according to METI. Q2 GDP growth of +1.2% QoQ reported in September by the Economic and Social Research Institute of Japan was
slightly below Bloomberg consensus expectations of +1.4%, though the BoJ's "Tankan" survey of business sentiment was much stronger than expected. Distortions in both the real economy and financial markets from subsidies and government-funded investments in strategic sectors such as semiconductors are starting to be worked out, but will continue to require more time to normalize. On the whole however, underlying fundamentals remain fairly positive. Employment conditions are stable and government policy is attempting to support wage growth while companies have strong cash positions and are improving profitability and governance. Valuations also remain attractive relative to other developed markets with the TSE Prime Section on a PER of 15.61x and PBR of 1.29x according to Nikkei data.
Result of Extraordinary General Meeting
At an EGM of the Fund held on 10th October 2023, it was resolved to merge the Fund with Nippon Active Value Fund plc by way of a scheme of reconstruction and a voluntary winding up of the Fund. Accordingly, this is the last newsletter that we will be producing for the Fund and we would like to take the opportunity to thank all our investors for their support over the 27 years since the Fund was launched. During that time the Investment Advisory Team under the late Ed Merner and Taeko Setaishi have delivered a strong performance with a NAV total return in sterling of 238.8% versus the TOPIX TR index of 94.0%.
PORTFOLIO STATISTICS
MARKET EXPOSURE | 71.4% |
TOP 10 HOLDINGS | (% TNA) |
Disco | 3.9 |
Sumitomo Mitsui Financial Grp | 3.8 |
FP Partner | 3.1 |
Shin-Etsu Chemical | 2.8 |
Mitsui & Co | 2.8 |
Daifuku | 2.7 |
Bellsystem24 Holdings | 2.7 |
Denso | 2.7 |
Recruit Holdings | 2.4 |
Komehyo Holdings | 2.3 |
SECTOR BREAKDOWN | (% TNA) |
Consumer Discretionary | 8.9 |
Consumer Staples | 1.1 |
Financials | 12.1 |
Health Care | 1.8 |
Industrials | 20.3 |
Information Technology | 21.0 |
Materials | 2.8 |
Real Estate | 1.0 |
Communication Services | 2.3 |
MARKET CAPITALISATION | (% TNA) |
> 10bn | 25.3 |
5-10bn | 2.7 |
2-5bn | 6.9 |
0.5-2bn | 17.1 |
< 0.5bn | 19.4 |
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 16 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 October 2023 09:08:09 UTC.
