Fund platform AJ Bell has made the first change to its investment trust recommended list since June 2023 by axing Japan Income & Growth.
The £248m trust has been managed by Richard Aston since its launch in 2015, who co-managed the portfolio alongside Jonathon Dobson until his retirement at the end of April 2024.
Since inception it has been the best performer of the five IT Japan trusts with a long enough track record, making 125.3%, around 30 percentage points ahead of the TSE Topix benchmark and average peer.
Performance of trust vs sector and benchmark since launch
Source: FE Analytics
AJ Bell’s analysts lost faith in the trust however, for two main reasons. The first is that when Dobson retired, Aston took over fund management duties for the Chikara Japan Alpha fund.
Paul Angell, head of investment research at AJ Bell, said: “The fund has considerable differences to the CC Japan Income & Growth franchise, with a focus on small- and medium-sized companies with premium long-term growth prospects.
“As such, Aston’s time will be more thinly spread managing both strategies, particularly given the additional focus smaller companies tend to require.”
The other factor involves the asset management firm, which was rebranded from Coupland Cardiff to Chikara following the retirement of its two founders Richard Cardiff and Angus Coupland at the end of 2022.
The pair sold their stakes in the partnership at a time when the company’s assets under management “continued to shrink”, Angell noted, despite efforts to reverse the trend through the addition of an emerging markets franchise in 2023 led by Jonathan Asante.
The removal leaves Baillie Gifford Japan as the only trust in the IT Japan sector recommended by AJ Bell.
Angell said it benefits from Baillie Gifford’s “embedded investment process”, which has a “strong growth flavour” in line with the firm’s style.
“The strength of the team is another positive and while there has been a recent change with figurehead Sarah Whitley retiring, the succession planning over the years has now come to full fruition,” he said.
“However, investors may require patience with the trust given its significant style bias to growth, as the trust is very likely to significantly deviate from index returns.”