Atlantis Japan Growth Fund Limited
The portfolio continues to have a bias towards high growth smaller companies, but has shifted to have slightly more exposure towards the domestic economy. A handful of long-term themes continue to run through the portfolio, which is constructed on a bottom-up basis.
Lead adviser Taeko Setaishi says that although consensus Japanese corporate earnings growth is being revised downwards, she is still able to identify primarily smaller-cap companies with promising growth prospects that are trading on attractive valuations. As an example, Setaishi highlights changing dynamics within the Japanese economy, which are generating growth in the widely diverse services sector.
While overall economic growth in the country remains modest, the adviser is continuing to find companies with attractive fundamentals that are trading on reasonable valuations, particularly in small and mid-caps. AIRC’s philosophy is that over the long term, a company’s share price performance is driven by its earnings growth, especially for smaller companies.
Despite re-rating to around par in the first quarter of 2018 AJG once again trades at a substantial discount to its closest peer, BGS, which trades on a premium of +2.9% and is a substantial spread over AJG’s -5.9% discount.
Given the improving economic backdrop in Japan and relatively attractive company valuations, Taeko Setaishi is positive on the outlook for Japanese equities and she continues to find interesting growth opportunities across a variety of sectors.
Atlantis Japan Growth Fund (AJG LN) has made substantial progress since surviving the requisition in 2016. Lead advisor Taeko Setaishi has successfully outperformed both the TOPIX and MSCI Japan Small Cap indices by +27.4%pts and +23.3%pts respectively* since her appointment on 1 May 2016.
With the Bank of Japan remaining focused on achieving its 2% rate of inflation, we recommend that investors underweight US equity markets and buy Japanese trusts such as Atlantis Japan Growth Fund (AJG) for exposure to small and mid-cap companies in Japan.
