Despite the Japanese market’s ascent to historic highs, the case for investing in this fascinating Asian nation remains compelling. The Japanese market is home to many high quality companies trading on cheap valuations.
Additionally, tailwinds from corporate governance reform, increasing share buybacks and renewed foreign interest remain powerful tailwinds for Japan. The market is seeing increased M&A activity, which is transforming the country’s corporate landscape and boosting shareholder returns.
As Stephen Cohen, chairman of investment trust JPMorgan Japanese (LON:JFJ), explains: ‘The rapid adoption of AI and a strategic surge in defence spending are driving industrial innovation. Coupled with the Bank of Japan’s successful move towards monetary normalisation and the first significant rise in real wages in decades, these factors continue to encourage foreign investment.’
In this article, we highlight the attractions of three dedicated Japan investment trusts. Each one is pursuing a differentiated investment strategy and offers exposure to the upside offered by the ‘Land of the Rising Sun’.
JPMorgan Japanese
Managed by Nicholas Weindling, Miyako Urabe and Xuming Tao, JPMorgan Japanese is the biggest Japan trust with more than £1.5 billion in total assets. Short-term performance has been hampered by the market’s continued rotation into value. JPMorgan Japanese’s quality-growth bias lagged a strong TOPIX index in H1. However, the trust’s longer-term record remains strong. The fund’s performance is ahead of the benchmark over one, three and 10 years.
Weindling believes Japan’s corporate governance reforms are still gathering momentum. He reckons will continue to lift shareholder returns and support the market for the foreseeable future. He has positioned the portfolio to capture the upside from structural growth themes such as AI, automation and defence spending.
| Share price: 796p | Discount to NAV: 6.2% |
| Total assets: £1.53bn | Ongoing charge: 0.46% |
JPMorgan Japanese offers exposure to names such as Mitsubishi Electric (TYO:6503), a beneficiary of rising demand for robotics, energy systems and defence equipment. Another position is Advantest (TYO:6857), which tests semiconductor equipment. The company is performing well thanks to AI-related demand.
JPMorgan Japanese also owns gaming company Nintendo (TYO: 7974) and Modec (TYO: 6269), an operator of floating platform and storage facilities used in deep-sea oil drilling. Ongoing charges of 0.46% are the lowest across the AIC’s Japan and Japanese Smaller Companies sectors.
CC Japan Income & Growth
Investors seeking to tap into the country’s strong dividend growth potential might view the 6.8% discount to NAV on CC Japan Income & Growth (LON:CCJI) as a buying opportunity. Since its late 2025 launch, this trust has outperformed the TOPIX and increased dividends every year. Distributions have grown at an annualised rate of 7.8%, supported by earnings growth and robust distributable reserves.
Managed by Richard Aston, CC Japan delivered NAV and share price total returns of 41.4% and 43.1% respectively in the year to 21 May 2026, handily beating the 28% index return.
CC Japan Income & Growth has positions in Nintendo and factory automation sensor maker Keyence (6861:TYO). Kepler Trust Intelligence points out that holdings such as electrical equipment manufacturer Fujikura (TYO:5803) are beneficiaries of continued demand linked to AI-related infrastructure and power investment.
| Share price: 271p | Discount to NAV: 6.8% |
| Total assets: £462.2m | Ongoing charge: 1.06% |
In addition, insurer Tokio Marine (TYO:8766) recently announced ‘improving capital returns buoyed by Berkshire Hathaway’s (NYSE:BRK.B) strategic stake, which reinforced investor confidence in the business’.
Kepler think Japan’s investment case is only strengthening. The research firm says one of the next key milestones is ‘the expected revision to Japan’s Corporate Governance Code later this year, which could place greater emphasis on how companies deploy excess capital, rather than disclosure alone.’ This should help unlock further value, particularly within smaller companies where excess cash and underutilised balance sheets remain more prevalent.
AVI Japan Opportunity Trust
Another compelling option is AVI Japan Opportunity Trust (LON:AJOT), which pursues an activist, engagement-led strategy within Japanese small and mid-cap companies. Manager Joe Bauernfreund aims to capitalise on Japan’s increased focus on corporate governance, balance sheet efficiency and shareholder returns.
The fund invests in undervalued, cash-rich companies and uses constructive engagement to unlock value. Its differentiated strategy has worked with many individual companies since launch in 2018. Investors should note that high concentration cuts both ways. It brings potential for underperformance as well as outperformance.
AJOT’s positive performance continued in 2025, a transformative year which saw the fund merge with Fidelity Japan Trust. Capital from the combination was allocated both into existing high-conviction holdings and new positions including Foster Electric (6794:TYO). Other holdings conglomerate Kurabo Industries (3106:TYO), legwear leader Atsug (3529:TYO) and online platforms operator Sharingtechnology (3989:TYO).
| Share price: 163.5p | Discount to NAV: 1.3% |
| Total assets: £411.3m | Ongoing charge: 1.4% |
AJOT’s combination with Fidelity Japan Trust created a larger, more liquid trust which should prove more attractive to wealth managers. Enlarged AJOT will have increased capability to take influential positions in companies where there are opportunities to unlock value through active engagement.
Bauernfreund believes rising pressure from regulators and activists presents ‘a compelling opportunity’ to unlock value in Japanese small and mid caps in 2026 and beyond. ‘With several key tailwinds and a deeply under researched market, our conviction in the strategy remains as high as ever,’ he recently insisted.
Investors keen to learn more about AJOT should sign up to our Investor Webinar via the link below. Nicola Takada Wood, Asset Value Investor’s managing director for Japan, will be speaking live.
INVESTOR EVENTS
Join our inaugural Investor Webinar on at 6pm Wednesday 24 June for a look inside the world of investment trusts. Hear directly from managers as they discuss how they are navigating today’s markets, where they are finding opportunities, and how portfolios are being positioned for the months ahead.
This is a chance to go beyond the headlines and understand the real decisions being made inside trust portfolios. A live Q&A will follow, giving investors direct access to the managers and the opportunity to ask questions on performance, strategy, and outlook.
Click on the link below to register for this free event:
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