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JPMorgan JSGI
JPMorgan Japan Small Cap Growth & Income JSGI

JPMorgan Japan Small Cap Growth & Income JSGI share price, company news, analysis and interviews

Japan income fund, JPMorgan Japan Small Cap Growth & Income plc (LON:JSGI / JSGI.L), targets Japan income without compromising on Japanese growth opportunities. This Japan fund is an income investing opportunity that gives investors access to a diverse and fast growing sector managed by local managers. The Investment Trust offers a regular quarterly income without compromising on Japanese growth opportunities, by paying a higher dividend funded part by capital reserves as well as revenue returns.

AGM Review Video 2024

The boards of JPMorgan Japanese and JPMorgan Japan Small Cap are pleased to announce the publication of documentation in connection with the proposed combination of the two companies. The combination, subject to shareholder approval, will be undertaken through a scheme of reconstruction by JSGI under s110 of the Insolvency Act 1986 (the “Scheme”), under which JSGI’s assets will be rolled into JFJ in exchange for the issue of new JFJ shares to the continuing JSGI shareholders. Under the terms of the Scheme, JSGI shareholders will be entitled to realise up to 25 per cent. of their investment in JSGI for cash. For full details you can read the circular.

Why invest?

 

JPMorgan Japan Small Cap Growth & Income plc provides access to the innovative and fast growing smaller stocks that are at the core of the Japanese economy. Investors benefit from a stock selection process based on extensive experience and local knowledge. The strengths of this Japan fund are as follows:

 

  • Expertise:

     – Managed by a local team offering on-the-ground expertise and in-depth knowledge of local markets in what is a very under-researched market.

     – Approximately 2,000 Japanese company visits made each year by the local team.

  • Portfolio:

     – Smaller companies in Japan is a diverse sector with strong growth potential, serving both local and global market needs.

     – Team focuses on good quality businesses with improved governance structures and opportunity for re-rating.

  • Results:  Access to a fast growing under researched market, with focus on businesses that reinvest to provide higher growth potential.

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Portfolio Managers

  • Miyako Urabe
  • Xuming Tao

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JPMorgan JSGI

JPMorgan Japan Small Cap Growth & Income JSGI share price

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JPMorgan JSGI

JSGI investment trust top ten holdings

JPMorgan Japan Small Cap Growth & Income Trust (LON:JSGI) has provided its 10 largest investments as at 31 August 2024:

Lifedrink Co Inc 3.1%
Sanwa Holdings Corp 3.1%
Biprogy Inc 2.8%
Swcc Corp 2.7%
Mitsubishi Ufj Lease & Finance 2.6%
Rakuten Bank Ltd 2.5%
Sohgo Security Services 2.3%
Azbil 2.2%
Mec Co Ltd 2.2%
Genky Drugstores Ltd 2.2%
Total 25.7%
Excludes Investments in Liquidity stocks

Japan income fund, JPMorgan Japan Small Cap Growth & Income plc (LON:JSGI / JSGI.L), targets Japan income without compromising on Japanese growth opportunities. This Japan fund is an income investing opportunity that gives investors access to a diverse and fast growing sector managed by local managers. The Investment Trust offers a regular quarterly income without compromising on Japanese growth opportunities, by paying a higher dividend funded part by capital reserves as well as revenue returns.

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JPMorgan JSGI

Japan income fund reports top ten investments in JSGI

JPMorgan Japan Small Cap Growth & Income Trust (LON:JSGI) has provided its 10 largest investments as at 28 June 2024:

Lifedrink Co Inc 3.2%
Sanwa Holdings Corp 3.0%
Biprogy Inc 2.7%
Mitsubishi Ufj Lease & Finance 2.6%
Mec Co Ltd 2.5%
Swcc Corp 2.5%
Mitsui Chemicals 2.3%
Rakuten Bank Ltd 2.2%
Seiko Group Corp 2.1%
Sohgo Security Services 2.1%
Total 25.2%
Excludes Investments in Liquidity stocks

Japan income fund, JPMorgan Japan Small Cap Growth & Income plc (LON:JSGI / JSGI.L), targets Japan income without compromising on Japanese growth opportunities. This Japan fund is an income investing opportunity that gives investors access to a diverse and fast growing sector managed by local managers. The Investment Trust offers a regular quarterly income without compromising on Japanese growth opportunities, by paying a higher dividend funded part by capital reserves as well as revenue returns.

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Interviews

Miyako Urabe, JPMorgan Japan Small Cap Growth & Income (JSGI) AGM Video 2023

Miyako Urabe JPMorgan Japan Small Cap Growth & Income (LON:JSGI) Portfolio Manager presents this AGM Video 2023.

https://vimeo.com/892136016

Targeting income without compromising on Japanese growth opportunities JPMorgan Japan Small Cap Growth & Income plc gives investors access to a diverse and fast growing sector managed by local managers. The Trust also offers a regular quarterly income without compromising on Japanese growth opportunities, by paying a higher dividend funded part by capital reserves as well as revenue returns.

JPMorgan Japan Small Cap Growth & Income plc provides access to the innovative and fast growing smaller stocks that are at the core of the Japanese economy. Investors benefit from a stock selection process based on extensive experience and local knowledge.

Miyako Urabe, vice president, is a country specialist for Japan equities and a member of the Japan team within the Emerging Markets and Asia Pacific (EMAP) Equities team based in Tokyo. Miyako joined the Firm in 2013 from Credit Suisse Securities Equity Sales desk in Tokyo as an Asia ex-Japan specialist. She began her career at Morgan Stanley MUFG Securities covering Japan and Asia ex-Japan. Miyako obtained a Bachelors degree in Economics from Keio University, Japan.

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Question & Answers

JPMorgan JSGI

Japan Growth & Income fund JSGI – ‘Growth opportunities investing in digitalisation´

Darren Turgel DirectorsTalk Managing Director caught up with Eiji Saito Portfolio Manager of the JPMorgan Japan Small Cap Growth & Income Fund last week to discuss growth opportunities in digitalisation. Darren asked:

Q. I think we would consider Japan to be a very mature economy & so perhaps some investors might be surprised to hear that there are so many growth opportunities in digitalisation? Can you help us with some examples please?

A. Firstly, we have invested in many digitalisation stocks over the years & our exposure to the Information Technologies sector is currently around 30% in the portfolio.

In Japan, it is a safe & comfortable country to live in and we Japanese haven’t have strong motivation to change our lifestyle & workstyle until recently. However, COVID-19 is a real wake-up call & digitalisation is accelerating in Japan to improve our labour productivity.

The first example is in e-commerce. The chart shows how low the percentage of cashless payments are in Japan compared to many other economies. We invest in a company called BASE which provides e-commerce software & BASE is growing rapidly as its service enables small operators & individuals to make their own e-commerce shop.

We also invest in a company called PLAID which offers a customer experience software platform & using PLAID service, retailers can visualise customers who visit their online stores & find out what visitors are truly looking for.

The second example is Cloud Infrastructure. Bengo4.com offers Cloud Sign – a cloud-based service for digital contracts. Japanese companies have typically used paper documents & personal stamps called Hanko but now, more & more companies are using Cloud Sign to improve labour productivity.

Money Forward is another example in the area and provides a wide range of cloud software including accounting software, payroll calculations, expense management & attendance management. Penetration is still very low in Japan & the cloud software market has plenty of room to grow.

We continue to find many excellent growth opportunities in Japan’s small cap market as smaller companies are really leading the digitalisation of Japan. Japan Income fund, JPMorgan Japan Small Cap Growth & Income plc (LON:JSGI), targets Japan income without compromising on Japanese growth opportunities. This Japan fund is an income investing opportunity that gives investors access to a diverse and fast-growing sector managed by local managers. The Investment Trust offers a regular quarterly income without compromising on Japanese growth opportunities, by paying a higher dividend funded part by capital reserves as well as revenue returns.

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Analyst Notes & Comments

JPMorgan JSGI

Japan income fund JSGI results ‘outperform MSCI benchmark’ consistently

JPMorgan Japan Small Cap Growth and Income Plc (LON:JSGI) has reported its half year results, for the year ending 30 September 2021. Over the period JSGI has generated a NAV total return of 7.2% and a share price return of 9.1%, outperforming the 4.9% delivered by its benchmark, the MSCI Japan Small Cap Index. The trust now has a strong track record of outperformance of the benchmark, which it has beaten over three, five, and ten years, as of 13/12/2021.

A key element of JSGI’s strategy is its dividend profile, whereby the trust pays a quarterly dividend equal to 1% of the quarter end NAV, with the trust having paid a total dividend per share of 11p so far this financial year. This represents a 10% increase on the 10p dividend that was paid in the first six months of the previous financial year. JSGI has a current dividend yield of 4.4%, as of 13/12/2021.

Kepler View

JSGI is a good example of a trust using the unique structural advantages at its disposal to offer something different to investors; in this case the payment of a c. 4% dividend combined with a portfolio of growth-focused Japanese small-cap stocks. JSGI’s managers, Eiji Saito, Naohiro Ozawa, and Michiko Sakai, follow an investment process that aims to identify the highest quality growth opportunities, by assessing a company’s ‘Economics’, ‘Duration’, and ‘Governance’. While JSGI has all the characteristics of a growth portfolio, thanks to the team’s philosophy it also demonstrates much better quality metrics than its benchmark.

We believe that Japan income fund JSGI offers an attractive solution for both income and growth investors, something that cannot often be said for many strategies. The trust offers investors exposure to the structural growth opportunities which can be found among Japanese smaller companies as well as a solid yield, and could be an interesting diversifier for those seeking to broaden the sources of income within their portfolio. We note that the current 8% discount (as of 13/12/2021) is wide relative to JSGI’s average historical discount, and wide relative to its peers.

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JPMorgan JSGI

Japan growth stocks, strong income and an attractive discount (LON: JSGI)

JPMorgan Japan Small Cap Growth & Income (LON:JSGI) offers its investors a way to access the structural growth opportunities within Japan’s small- and mid-cap equity market. JSGI is run by a three-strong team based locally in Tokyo, who are in turn supported by a substantial team of 25 equity investment specialists. The team aim to capitalise on a number of trends which they believe are driving the modern Japanese economy, purchasing the highest-quality growth-focussed stocks that are able to capitalise on these opportunities. JSGI’s portfolio is also characterised by its high active share and low turnover.

JSGI has been able to outperform its peers and benchmark, the MSCI Japan Small Cap Index, over the longer term. It has done this with an attractive risk–return profile, including lower volatility and downside capture than its peers. However, due to the headwinds impacting its quality growth style, it has underperformed over the last 12 months.

One of the most distinguishing features of JSGI is its income profile. JSGI currently has a policy of paying out 1% of its NAV each quarter as a dividend, which equates to a historical yield of 4.0%. This means it offers a high yield from a market that income investors are unlikely to have much exposure to, bringing diversification potential, as we highlight in the Dividend section. JSGI currently trades on a 8.4% discount which is narrower than its five-year average, reflecting the positive reception of its dividend policy and the long-term tailwinds supporting Japanese growth investing.

Kepler Trust Intelligence Analyst’s View

While we view JSGI as being an attractive proposition for any growth-minded investors wishing to access the structural trends underpinning Japan’s economy, we believe that JSGI’s dividend profile makes it a unique proposition. Generating an attractive level of income from Japanese equities is a challenge, given their historically low yields and the governance issues facing Japanese companies. Yet by being able to capitalise on its closed-ended structure, we believe that JSGI offers income investors a truly unique and attractive proposition. Not only does it offer an attractive yield, but it also offers access to an often-overlooked market with diversification benefits. Thanks to the team’s quality growth bias, it also offers an investment style with a strong structural growth story that income investors seldom have access to without having to sacrifice on yield.

Japanese growth stocks are facing near-term headwinds, which are reflected in JSGI’s 12-month performance as well as its current discount, which in our view could make an attractive entry point. Long-term investors able to ride out the current markets may find it possible to capitalise on a potential narrowing of JSGI’s future discount if we return to more supportive markets.

In our view Eiji Saito, Naohiro Ozawa and Michiko Sakai’s approach is conducive to long-term capital growth, thanks to Eiji’s stalwart commitment to capitalising on the trends of ‘new Japan’. However, if the current value stock rally continues JSGI may also continue to underperform, as its holdings are typically sold off during the early stages of an economic recovery.

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JPMorgan JSGI

Japan investment trust JSGI superior performance and competitive dividend

JPMorgan Japan Small Cap Growth and Income Trust plc (LON:JSGI) offers exposure to the high growth potential in small and mid-cap Japanese equities as well as a significant income pay-out, in part from capital. The JSGI team is composed of three experienced managers based locally in Tokyo, with the broader Japan team making over 4,000 company visits a year.

The JSGI team uses a multi-faceted investment process to identify what the team believe are the highest quality companies within Japan’s mid and small-cap space, with a distinct focus placed on companies which can best capitalise on the sectoral trends driving Japanese equity markets. We outline this further in our portfolio section.

JSGI has generated enviable performance over the last five years, with a NAV total return of 129.1% and a share price return of 140.0% over the last five years, compared to the 76.6% return of its benchmark. We note that a large part of this return can be attributed to the impact of COVID-19 on the Japanese economy, with the resulting change in consumer patterns disproportionately benefitting many of the names in JSGI’s portfolio.

JSGI has recently changed its name, to better reflect its income generating potential. Since April 2018, JSGI pays a dividend each quarter equal to 1% of the NAV at the end of the previous quarter, meaning it can offer an income despite the relatively low yield of the small-cap growth sector. The historic yield is currently 3.7% (as at 10/02/2021). While JSGI trades at an 8.7% discount, this has been narrowing over recent years thanks, we think, to its superior performance and the introduction of a competitive dividend.

Analyst’s View

JPMorgan Japan Small Cap Growth and Income Trust plc offers a powerful combination of exposure to a high growth market with an illiquidity premium attached and a high regular income, using the flexibility of the closed-ended structure to the full – indeed its strategy would be impossible in an open-ended fund. Thanks to the change of dividend policy in April 2018, JSGI is now one of the few ways investment trust investors can simultaneously access the Japanese small and mid-cap market without having to sacrifice an income.

You can view the full Kepler article here:

JPMorgan Japan Small Cap Growth & IncomeDownload

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JPMorgan JSGI

Strong returns, compelling story, attracts Japan income and growth investing in JSGI trust

Results analysis from Kepler Trust Intelligence

JPMorgan Japan Small Cap Growth & Income (LON:JSGI) has reported its final results for the year ending 31st March 2021. Over that period JSGI generated a NAV total return of 42.4% and a share price return of 47.9%, beating the 21.7% return of its benchmark, the S&P Japan Small Cap Net Return Index.

JSGI continues to offer investors a competitive yield despite investing in a portfolio of Japanese small caps, which are not traditionally hunting grounds for income investors. This is due to the board’s policy of paying out 1% of its NAV each quarter, from capital if necessary. JSGI currently has a dividend yield of 4.3% (as of 17/06/2021).

Kepler View

Over its financial year JSGI has been able to deliver enviable returns, far in excess of its benchmark. While JSGI’s total return is certainly impressive we believe that of equal, if not greater, importance is the rare combination of Japanese small cap exposure and a competitive yield on offer here. This makes it an interesting source of potential diversification for income seeking investors.

The team behind JSGI follow a process which has a clear focus on identifying the best quality growth opportunities within Japan, and stock selection has been the primary contributor to the financial year returns. Beyond bottom up the team rely heavily on their understanding of the trends underpinning Japan’s economy.

The pandemic has ultimately done little to impact the strategy of the team, given their discipled long-term view to investing. If anything it may have accelerated the adoption of these themes by encouraging greater use of technology, improved productivity and corporate consolidation.

While the near term market environment remains one of uncertainty, as the clear ‘winners’ of the pandemic recovery become harder to identify and Japan lags behind its developed peers in the vaccine rollout, the JSGI team remain unruffled. They believe that Japan remains determined to achieve its long-term goals; sustainable and broad-based growth driven by digitalisation, improving corporate governance and increased access to free trade.

In our view, the trust’s appeal as a long-term play for investors seeking well managed exposure to the growth generated by Japanese smaller companies, with the benefit of a differentiated yield, remains obvious against that backdrop – even after the trust’s recent strong run…

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