Chern-Yeh Kwok, investment manager

The company’s net asset value total return for the six month period to 30 September 2020 was 26.3%, posting a strong and welcome gain compared with the Topix benchmark’s 14.8% total return.

It was confirmed that under a newly enhanced dividend policy approved last year, a final dividend of 9.0p per ordinary share in respect of the year ended 31 March 2020 was paid to shareholders in July 2020, making a total dividend for the year of 15.0p. Using the company’s closing share price of 640p for 30 September 2020 this indicates a historic yield of 2.3%.

Whilst the revenue return per ordinary share over the six month period to 30 September 2020 fell to 2.65p (2019 – 3.77p), the Manager has forecast an overall drop in dividend income for the full year in the low single digits. This is following a detailed review of the portfolio and discussions with portfolio company management teams.

The Board has declared an unchanged interim dividend of 6.0p for the year ending 31 March 2021 (2020 – 6.0p) which will be paid to shareholders on 31 December 2020. The Board continues to make use of the benefits of the investment trust structure to allow the Company to support the enhanced dividend policy.

Commenting on the fund’s performance, Karen Brade, chairman of Aberdeen Japan Investment Trust PLC, said: “Broadly, the Aberdeen Japan Investment Trust’s holdings fared well across most sectors, reaffirming the Manager’s strategy of selecting well-run businesses with management adapting well to the fluidity of market conditions stemming from both international and domestic factors.

“The volatility has also presented some interesting investment opportunities for the company. Over the period under review, the investment manager has worked to unlock shareholder value in the portfolio companies, including driving improvements in governance and capital efficiency, as well as seeking evidence of post-pandemic recovery plans, in advance of AGM votes. These efforts are bearing fruit and underpin the approach to long-term, active investment.

“The company’s longer term performance has also been strong with NAV returns of 23.9% and 78.0% over 3 and 5 years respectively, compared to benchmark returns of 15.3% and 71.7%.”

Chern-Yeh Kwok, investment manager, added: “While we have been pleasantly surprised by the rebound in Japanese equities considering the global backdrop, the world is facing a second wave of infections. Governments are back to where they were six months ago, re-imposing lockdowns in an attempt to rein in the spike in COVID-19 infections before the winter sets in. Recent announcements in respect of potentially effective vaccines in the pipeline have however lifted investor sentiment and stock markets across the globe. As at 23 November 2020, the Topix index has risen 6.2% since the period end.

“In geopolitics, US/China tensions are likely to persist, even under a Democratic US Administration. Japan will remain a crucial political and security ally of the US, although China remains a crucial trade and investment partner for the Japanese corporate sector.”

“What is certain is that the company’s holdings continue to possess favourable long-term prospects that have not been so badly affected by the pandemic; indeed for many the pandemic has proven to be a very positive catalyst. These holdings reflect the investment approach that we take, in seeking out and investing in good-quality businesses that have the financial strength to withstand protracted and systemic shocks. They are run by progressive management, backed by solid fundamentals, and are open to engaging with investors like ourselves, while respecting minorities’ interests. This bodes well for the company in the uncertain days ahead, knowing that the quality of these underlying holdings is what will make the difference in difficult times.

“As a team of locally-based investment managers, we seek to constantly engage with our investee companies to encourage better governance and ESG policies. This should, and often does, deliver better results in terms of share price, as investors recognise the efforts that these companies are making, resulting in share price re-rating where fully disclosed and understood. We are committed to this active engagement and our detailed bottom-up research process should continue to improve returns for shareholders.”