It has been a turbulent quarter to say the least. The outbreak of COVID-19 and the related lockdowns have led to a broad sell-off in global assets. There have been few safe havens, and although Japan has experienced a lower infection rate to date than Western countries, Japanese equities have suffered nonetheless.
Over the quarter AJOT’s NAV decreased by -18.5% (-24.2% in Yen) vs -14.5% return for the MSCI Japan Small Cap Index. While our portfolio’s share price performance was slightly amplified by AJOT’s gearing (which averaged 8% over the quarter), the fall is quite remarkable given our portfolio began the year with 81% of its market cap covered by net cash and listed investments. Logically, a portfolio of cash-rich quality companies should fare well in the current environment but, at least in the short-term when panic takes over, fundamentals are ignored.
AVI Japan Opportunity Trust p.l.c is referred to as ‘AJOT’ throughout the website. AJOT’s investment managers, Asset Value Investors are referred to as ‘AVI’