| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.39% | 19.01% | 21.89% |
The Japan Opportunities Fund returned 19.01% in Q2 2026, outperforming the TOPIX Index which returned 11.26%, as Japanese equities rose strongly to all-time highs. The AI rally broadened beyond chipmakers, with top contributors Murata Manufacturing and Kokusai Electric reaching record highs on surging AI server demand and improving semiconductor capex outlooks. Chugai Pharmaceutical detracted due to slower GLP-1 prescription uptake. The manager established a position in Tokyo Electron given its competitive position in semiconductor equipment and closed Mitsui Fudosan due to disappointing capital allocation. The Bank of Japan raised rates to 1.0% and strong Shunto wage increases suggest inflation is becoming entrenched, supporting a positive wage-price feedback loop. The manager remains constructive on Japan's structural outlook, citing reasonable valuations, sound fundamentals, and ongoing corporate governance reforms expected to improve returns and support re-rating. While maintaining meaningful semiconductor exposure, the manager emphasizes discipline and focuses on quality management teams to navigate near-term volatility from geopolitical risks.
The manager seeks long-term capital appreciation by investing in undervalued, cash-generative, and capital-efficient Japanese businesses with strong management teams, focusing on stock selection through rigorous fundamental research and strict valuation discipline while maintaining exposure to structural themes including AI, semiconductor infrastructure, and corporate governance improvements.
The manager remains positive about Japan's long-term structural outlook, believing valuations remain reasonable, corporate fundamentals are sound, and earnings momentum is intact. While volatility could remain high in the short term due to geopolitical risks, the manager is focused on the quality of management teams and businesses to help navigate and capitalize on changes. AI remains a durable investment theme with broadening opportunities across the supply chain. Corporate governance reforms are expected to continue supporting Japanese equities through improved return on equity and share price re-rating.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 13 2026 | 2026 Q2 | 4519.T, 5471.T, 6525.T, 6981.T, 8035.T, 8801.T | AI, Corporate Governance, inflation, Japan, semiconductors, technology, value | - | The fund returned 19% in Q2 2026, driven by AI-related semiconductor holdings Murata and Kokusai Electric reaching record highs as demand broadened beyond chipmakers. The manager added Tokyo Electron on semiconductor infrastructure strength while exiting Mitsui Fudosan on capital allocation concerns. With Japanese inflation entrenching, corporate governance improving, and valuations reasonable, the manager maintains a constructive long-term view despite near-term geopolitical volatility. |
| Apr 16 2026 | 2026 Q1 | 4186.T, 4684.T, 6098.T, 6702.T, 7532.T, 8766.T | AI, Governance, insurance, Japan, semiconductors, software | 8591.T | Japan Opportunities Fund gained 2.42% in Q1 2026, lagging the TOPIX on software weakness from AI disruption fears. Tokio Marine surged on Berkshire partnership while Tokyo Ohka Kogyo benefited from semiconductor materials demand. Manager remains constructive on Japan's structural outlook, emphasizing quality stock selection amid political stability and corporate governance improvements. |
| Jan 16 2026 | 2025 Q4 | 1803.T, 4091.T, 4385.T, 4519.T, 6141.T, 6758.T | AI, Construction, Corporate Governance, E-Commerce, inflation, Japan, Pharmaceuticals | - | Japan Opportunities Fund outperformed in Q4 as new PM Takaichi's pro-growth policies and robust corporate results drove Japanese equities to all-time highs. Construction and e-commerce holdings led gains while industrial gas faced macro headwinds. Fund added pharmaceutical exposure and remains focused on quality businesses to navigate volatility while capitalizing on inflation pass-through and AI opportunities. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI remains a durable global investment theme with a wide range of companies across the value chain in Japan. The AI rally broadened beyond chipmakers, driving Murata Manufacturing and Kokusai Electric to record highs. Demand from AI servers continues to surge, benefiting MLCC manufacturers and semiconductor equipment makers. |
Semiconductors Data Centers Cloud Semiconductor Cycle |
Semiconductor CycleThe manager maintains a meaningful allocation to semiconductors but remains mindful of the sector's cyclical nature. An improving capex outlook in China and memory markets drove Kokusai Electric higher. Tokyo Electron was added as a new position given its strong competitive position and expected ramp up in semiconductor infrastructure spending. |
Semi Equipment Memory China Capital Markets | |
InflationInflation has become more entrenched in the Japanese economy, with the underlying inflation rate remaining above the BoJ's 2.0% target despite a slowdown in core inflation to 1.4%. Strong wage increases during Shunto suggest a positive feedback loop where solid wage growth supports structural price increases has been established. |
Rates Japan Earnings | |
JapanJapanese equities rose strongly with the TOPIX reaching an all-time high. The manager remains positive about Japan's long-term structural outlook, citing reasonable valuations, sound corporate fundamentals, and intact earnings momentum. Ongoing improvements in corporate governance and shareholder value remain a tailwind, with reforms expected to improve return on equity and support share price re-rating. |
Buybacks Earnings Quality Value | |
GLP1Chugai Pharmaceutical's share price was impacted by slower-than-expected prescription uptake for its new oral GLP-1 obesity pill, making it one of the main detractors during the quarter. |
Pharmaceuticals Biotechnology | |
| 2026 Q1 |
AIAI remains a durable global investment theme including in Japan. While investor attention has often focused on high-beta opportunities, there is a widening search for quality beneficiaries, expanding the opportunity set and enabling selective investment in attractively valued, high-quality companies aligned with the theme. Software businesses faced pressure due to concerns about AI-driven disruption risks and potential negative impact on labour markets. |
Software Disruption Technology Innovation Automation |
JapanPrime Minister Takaichi's decisive election victory provides a strong mandate to advance pro-growth policies over the coming four years. Measures aimed at strengthening Japan's industrial base and national defence should support activity across multiple sectors. Ongoing improvements in corporate governance and shareholder value remain a tailwind for Japanese equities with expected revisions to the Corporate Governance Code and Companies Act. |
Politics Governance Reform Industrial Defense | |
SemiconductorsTokyo Ohka Kogyo benefited from strong trading statement and earnings upgrades due to robust demand for advanced semiconductor materials. The company operates in the semiconductor materials space which is experiencing strong demand dynamics. |
Materials Electronics Technology Manufacturing | |
| 2025 Q4 |
BuybacksMultiple portfolio companies executed significant share repurchase programs in 2025. Virgin Wines repurchased around 10% of outstanding shares, DCC completed a tender offer for 12% of shares, Associated British Foods bought back 5%, and Naked Wines retired approximately 7% through buybacks and tender offers. |
Share Repurchases Capital Allocation Value Creation |
AIThe manager views AI concerns as market overreaction, particularly regarding comparison and classified portal businesses. He believes the market is 'throwing the baby out with the bathwater' when factoring AI impact on platform business models, underestimating their adaptability under experienced management. |
Artificial Intelligence Platform Business Market Overreaction | |
ValueThe fund focuses on companies trading below intrinsic value, with several holdings in 'net-net' situations where market capitalization trades below excess cash. The manager emphasizes purchasing companies at reasonable prices as a core investment principle and sees current low valuations as creating mechanical spring tension for future rebounds. |
Net Net Intrinsic Value Valuation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 16, 2026 | Fund Letters | Janus Japan Opportunity Fund | 8591.T | OBIC Business Consultants | Financial Conglomerates | Application Software | Bull | New York Stock Exchange | Accounting Software, AI disruption, contrarian, Japan Technology, net cash, SME Software, value opportunity | Login |
| TICKER | COMMENTARY |
|---|---|
| 6981.T | As the world's leading manufacturer of MLCCs (multilayer ceramic capacitors), Murata is expected to benefit from both volume growth and product mix improvement as demand from AI servers continues to surge. |
| 6525.T | Kokusai Electric is a niche semiconductor equipment manufacturer with significant exposure to China and memory markets. An improving capital expenditure (capex) outlook in both segments drove its share price higher. |
| 4519.T | Chugai's share price was impacted by a slower-than-expected prescription uptake for its new oral GLP-1 obesity pill. |
| 5471.T | Concerns about rising raw material costs and some profit-taking dampened NOF's share price during the quarter. |
| 8035.T | We believe the company has a strong competitive position across the chip manufacturing process, and a ramp up in semiconductor infrastructure spending could increase demand for its products. |
| 8801.T | We closed the position in real estate developer Mitsui Fudosan as its management's capital allocation decisions failed to meet our expectations, while underlying earnings faced inflation pressures. |
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