Strong relative performance continues: CC Japan

Approaching its tenth anniversary in December 2025, CC Japan Income & Growth (CCJI) continues to showcase the resilience of its quality-led, differentiated approach to investing in Japan. The trust has been the best performer in its peer group since launch, underlining the consistency of its strategy. Even over the past 12 months, which have seen a sharp sell-off following Liberation Day and the subsequent tariff-related volatility that rattled Japanese markets, performance has remained modestly ahead of the TOPIX TR index, supported by strong stock selection, particularly among financials.

Lead manager Richard Aston has remained consistent in his process, continuing to prioritise companies with resilient fundamentals, long-term growth prospects underpinned by Japan’s corporate reforms and strong total-return potential. He has, however, selectively adjusted the Portfolio on valuation grounds, initiating new positions in Hamamatsu Photonics and Shimano to take advantage of short-term dislocations and add long-term quality at attractive prices. At the same time, exposure to financials has been reduced following strong performance from several key holdings, though CCJI’s portfolio remains tilted towards high-quality, cash-generative businesses with improving shareholder policies. Whilst this can make the trust appear relatively expensive versus the broader market on a price-to-book basis, its holdings typically deliver higher profitability and stronger cash conversion.

Furthermore, the trust’s Dividend has risen every year, compounding at 7.8% since inception, and it could earn a place on the AIC’s ‘Next Generation Dividend Heroes’ list if it achieves a tenth consecutive increase this year. These consistent dynamics, alongside solid performance, have helped narrow the Discount to 7.8% at the time of writing, within its five-year average of 8.2%. CCJI holds a Kepler Income Rating for 2025.

Japan’s market backdrop continues to evolve, with several long-standing headwinds now reversing. Inflation has replaced deflation, interest rates have turned positive and the yen appears to be stabilising. Meanwhile, foreign investors have returned as net buyers, NISA reform is driving domestic inflows, and corporate governance progress is improving shareholder alignment and prompting companies to deploy cash-heavy balance sheets more effectively for long-term growth. Although equity valuations have risen, they remain attractive relative to other developed markets.

Against this improving backdrop, we think CCJI is well placed to capture these structural tailwinds. Reforms aimed at raising governance standards and capital efficiency are making companies more investable, rather than simply compelling investors to invest in them, creating a broader opportunity set for active managers like Richard and fostering a more efficient, shareholder-focussed market. With over three decades of experience, Richard continues to use these conditions and bouts of market volatility to his advantage, adding long-term quality during short-term dislocations and uncovering under-the-radar, alpha-rich opportunities across the market-cap spectrum.

Richard’s stock selection approach and total-return focus have helped CCJI build a competitive income record alongside strong, index-beating NAV performance since inception. Investors should note that the trust’s quality-driven approach can mean it lags during sharp, momentum-led rallies. Japan itself also remains exposed to external shocks, currency moves and shifts in global sentiment, particularly given recent tariff uncertainties. Nonetheless, as Japan’s structural story gains further traction, we see CCJI’s blend of capital and income growth potential, alongside its governance-aligned exposure, as a compelling option for long-term investors.