NAVF celebrates 5th anniversary
NAVF celebrates 5th anniversary with cumulative investment gain of 103%
LONDON - 26th February 2025 - Nippon Active Value Fund plc, a LSE-listed investment trust that engages in activist campaigns targeting small and mid-cap stocks in Japan, has celebrated its 5th anniversary with a cumulative NAV gain of 103% since launch in 2020.
The investment trust's performance saw it win a Citywire award in 2024 for Best Japanese trust over three years to August 31. NAVF recorded a net asset total return of 51.1% over that timeframe.
Rosemary Morgan, Chairman of NAVF, said: "NAVF has outperformed Japan focused trusts and the wider investment trust sector since launch. The success of our approach is underscored by the consistent investment performance, small discount to net-asset-value and our absorbing of Abrdn Japan Investment Trust & Atlantis Japan Growth by large shareholder majority votes."
Paul ffolkes Davis, Chairman of Rising Sun Management, NAVF's investment advisor, said: "NAVF offers British investors a three-fold play: diversification, compelling valuations and an opportunity to ride the activist wave being encouraged by the Japan government's increasingly effective governance and reform policies."
Diversification
Typically, British investors look mainly to the US to complement their primary UK equity allocations. NAVF shows that diversification into Japan is both performance enhancing and gives UK investors access to companies that are less correlated to the UK and US markets.
Compelling valuations
Small and mid-cap Japan companies trade on low P/E ratios (often below 10x vs S&P 500's 25x ) with about 1/3 of all Japan listed (TOPIX) companies trading below book value, with many having no debt and substantial balance sheet cash. This provides both a margin of operational safety but also the means to fund dividend increases and share buybacks.
Wave of activism
Activist strategies are particularly well placed to target and unlock value from the Japanese market given its unique characteristics. Private equity and activists have $10s of billions to invest in Japan where they have been underweight. The number of activist funds in Japan has tripled in a decade to over 40 - now even investors not generally associated with activism, such as Silchester International Investors, Neuberger Berman and GMO, are embracing its tactics.
Mr ffolkes Davis added: "What has underpinned NAVF's approach is its success in picking company targets in Japan and working with them to take shareholder friendly measures such as board changes, higher dividend payments, asset sales and to boost company valuations and investor returns."
"In recent years, the 'Abenomics' corporate governance and economic reforms (initiated in former Prime Minister Shinzo Abe in 2014) have borne fruit," Mr ffolkes Davis continued. "Japan's GDP is growing again, companies are restructuring to provide better ROIC, corporate managers are increasingly forced to focus on delivering better financial performance for shareholders and a number of takeovers/MBOs at premium exit prices have taken place."
Ends
NOTES TO EDITORS
About NAVF
Nippon Active Value Fund ("NAVF") is an Investment Trust on the official list and premium segment of the London Stock Exchange. The investment advisor of the Fund is Rising Sun Management Limited. NAVF is targeting attractive levels of capital growth for shareholders from the active management of a focused portfolio of quoted small and mid-cap Japanese equity investments. The investment advisor, Rising Sun Management, targets companies which are attractive, undervalued and have a substantial proportion of their market capitalisation held in cash and/or listed securities and/or realisable assets.
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