FOR PROFESSIONAL CLIENTS ONLY – NOT FOR RETAIL USE OR DISTRIBUTION
MONTHLY COMMENTARY | 31 DECEMBER 2015
JPM Japan Fund
A (acc) GBP net: GB0030879471
For other available share classes, please check the prospectus.
Topline
Month in review
FE Trustnet crown rating as at January 2016.
•The Fund underperformed the benchmark in December 2015.
•The key contributors were our overweight positions in Ono
Pharmaceutical (drug research and development), Nihon M&A Center
(a merger and acquisition consultant for small to medium sized
companies), and Casio (a consumer electronics manufacturer). The share
price of Ono Pharmaceutical continued to outperform and made a notable
positive contribution, as the company’s Opdivo (an immunotherapy drug
for cancer) product was identified more widely as the growth driver of
the company.
•Sector allocation detracted from performance over the month. Our
overweight in the electric appliances sector was negative, although we
were able to offset this impact through strong stock selection. External
factors, including concerns over the Chinese market, continued to push
down export related sectors, including the electric appliances sector.
Underweighting the land transportation sector also negatively impacted
as the sector’s return was relatively firm due to its defensive nature.
•The largest negative contributors at the stock level were the fund’s
overweight positions in Don Quijote Holdings (discount stores), Pigeon
(baby care goods), Lion (dental products) and Kose (cosmetics). The share
prices of these inbound Japan tourism beneficiary names fell victim to
profit-taking, as the growth in spending per tourist is moderating.
Fund overview
Looking ahead
Investment objective
•We expect another good year for Japanese equities in 2016. Policy
remains supportive: the Bank of Japan has not taken major action since
October 2014, against the backdrop of solid corporate fundamentals and
a stable Japanese yen exchange rate.
•With investors sceptical about Japan’s economic revival, the earnings
recovery and an increase in shareholder returns not fully priced into
valuations, we continue to see a strong investment opportunity.
•We continue to focus on structural growth areas where we find
compelling investment opportunities, such as the increasing number of
tourists visiting Japan, the growth in penetration of e-commerce, factory
automation, the aging population, and companies prioritising improving
shareholder returns.
Fund
1.70%
Benchmark*
2.62%
Markets In December 2015, central bank action drove the market’s
direction, with the market falling after a strong start to the month.
Helped Stock selection was the main positive contributor over the
month.
Hurt Sector allocation detracted value. Our overweight in the electric
appliances sector was negative, although we were able to offset this
impact through strong stock selection.
Outlook Although we have seen a volatile start, we expect another
good year for Japanese equities in 2016, given a sustained structural
recovery in corporate fundamentals.
* Benchmark - see performance table on page 2.
Ratings
FE Crown Fund
To provide capital growth over the long term by investing primarily in the
shares of Japanese companies.
All data is sourced by J.P. Morgan Asset Management and is correct as at the date of this commentary unless otherwise stated.
PAGE 2 of 2 | MONTHLY COMMENTARY | 31 DECEMBER 2015 | JPM Japan Fund
Performance
%
1M
3M
TOP/BOTTOM FIVE POSITIVE/NEGATIVE ACTIVE POSITIONS
AGAINST THE INDEX (%)
YTD
1Y
3Y
5Y
2015
2014
2013
JPM Japan Fund
1.70 14.54 27.28 27.28 20.79 10.21 27.28 0.58 37.66
A (acc) GBP net
TOPIX (total
return net)
Excess return
(geometric)
2.62 12.35 17.81 17.81 14.51 6.28 17.81 2.37 24.50
-0.90 1.95
8.04 8.04 5.48 3.69 8.04 -1.75 10.57
Source: J.P. Morgan Asset Management. Fund performance is shown based on the NAV of
the share class A in GBP with income (net) reinvested including ongoing charges, excluding
any entry and exit fees. Past performance is not an indication of future performance.
Performance over 1 year is annualised. Share class inception date is 31.03.2005.
Stock
Keyence Corporation
Position
Stock
Position
3.62
Toyota Motor Corp.
-4.07
M3, Inc.
3.14
Sumitomo Mitsui
Financial Group, Inc.
-1.59
Fuji Heavy Industries Ltd.
3.04
Honda Motor Co., Ltd.
-1.54
Casio Computer Co., Ltd.
2.86
SoftBank Group Corp.
-1.50
Asahi Intecc Co., Ltd.
2.86
Mizuho Financial Group,
Inc.
-1.48
Source: J.P. Morgan Asset Management. As at 31.12.2015. The companies/securities above
are shown for illustrative purposes only. Their inclusion should not be interpreted as a
recommendation to buy or sell.
TOP 5/BOTTOM 5 SECTOR BREAKDOWN (%)
Compared to benchmark
Services
Electric Appliances
Retail Trade
Cash
Precision Instruments
Construction
Wholesale Trade
Land Transportation
Transportation Equipment
Banks
19.59
17.21
7.71
2.85
3.52
0.27
0.93
0.00
5.46
3.45
16.24
5.44
2.91
2.85
1.96
-2.67
-3.05
-4.43
-5.28
-5.68
Source: J.P. Morgan Asset Management. The Fund is an actively managed portfolio;
holdings, sector weights, allocations and leverage, as applicable are subject to change at the
discretion of the Investment Manager without notice. Data as at 31.12.2015.
RISK PROFILE
The value of Equity and Equity-Linked Securities may fluctuate
in response to the performance of individual companies and
general market conditions.
This Fund is aggressively managed, which may result in higher
volatility of the Fund’s performance and bigger differences
between the performance of the Fund and its Benchmark.
The single market in which the Fund primarily invests, in
this case Japan, may be subject to particular political and
economic risks and, as a result, the Fund may be more volatile
than more broadly diversified funds.
The Fund may be concentrated in a limited number of
securities and, as a result, may be more volatile than more
broadly diversified funds.
The Fund invests in securities of smaller companies which
may be more difficult to sell, more volatile and tend to carry
greater financial risk than securities of larger companies.
For investors in Share Classes which are not hedged to Sterling
movements in currency exchange rates can adversely affect
the return of your investment.
Investors in GBP Hedged Share Classes should be aware that
any currency hedging process may not give a precise hedge.
Where currency hedging is undertaken, whilst it may protect
an investor in Hedged Shares against a decrease in the value
of the currency being hedged, it may also prevent the investor
from participating in an increase in the value of the currency.
In addition, in the unlikely event that some of the assets in the
Fund chosen by the Investment Adviser are not denominated
in Japanese Yen, the impact of the currency hedging from
Japanese Yen to GBP will mean that some over hedging will
occur leading to some currency exposure.
FOR PROFESSIONAL CLIENTS ONLY - NOT FOR RETAIL USE OR DISTRIBUTION
This is a promotional document and as such the views
contained herein are not to be taken as an advice or
recommendation to buy or sell any investment or interest
thereto. Reliance upon information in this material is
at the sole discretion of the reader. Any research in this
document has been obtained and may have been acted
upon by J.P. Morgan Asset Management for its own purpose.
The results of such research are being made available as
additional information and do not necessarily reflect the
views of J.P. Morgan Asset Management. Any forecasts,
figures, opinions, statements of financial market trends or
investment techniques and strategies expressed are unless
otherwise stated, J.P. Morgan Asset Management’s own at
the date of this document. They are considered to be reliable
at the time of writing, may not necessarily be all-inclusive and
are not guaranteed as to accuracy. They may be subject to
change without reference or notification to you.
4d03c02a8002d017
It should be noted that the value of investments and the
income from them may fluctuate in accordance with market
conditions and taxation agreements and investors may not
get back the full amount invested. Changes in exchange rates
may have an adverse effect on the value, price or income of
the product(s) or underlying overseas investments. Both past
performance and yield may not be a reliable guide to future
performance. There is no guarantee that any forecast made
will come to pass. Furthermore, whilst it is the intention
to achieve the investment objective of the investment
product(s), there can be no assurance that those objectives
will be met.
J.P. Morgan Asset Management is the brand name for the
asset management business of J.P. Morgan Chase & Co.
and its affiliates worldwide. You should note that if you
contact J.P. Morgan Asset Management by telephone those
lines may be recorded and monitored for legal, security
and training purposes. You should also take note that
information and data from communications with you will
be collected, stored and processed by J.P. Morgan Asset
Management in accordance with the EMEA Privacy Policy
which can be accessed through the following website
http://www.jpmorgan.com/pages/privacy.
Investment is subject to documentation which is comprised
of the Prospectus, Key Investor Information Document (KIID)
and either the Supplementary Information Document (SID)
or Key Features/Terms and Condition, copies of which can be
obtained free of charge from J.P. Morgan Asset Management
Marketing Limited. Issued by J.P. Morgan Asset Management
Marketing Limited which is authorised and regulated in the
UK by the Financial Conduct Authority. Registered in England
No: 288553. Registered address: 25 Bank St, Canary Wharf,
London E14 5JP.