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View NowPast performance does not predict future returns. You may get back less than you originally invested. Reference to specific securities is not intended as a recommendation to purchase or sell any investment.
- Weaker global growth and a strong yen will weigh on earnings for major exporters, but the domestic story continues to play out.
- Japan’s economy is transitioning from deflation to a mildly inflationary environment and there is rising corporate return on equity and shareholder returns driven by the Tokyo Stock Exchange’s governance reforms.
- The outlook for Japanese equities remains strong with robust earnings and ongoing corporate governance reform.
The Liontrust Japan Equity Fund returned 4.9%* over the quarter, against the 4.8% return from the TSE TOPIX Index comparator benchmark and the 5.8% average return in the IA Japan sector, also a comparator benchmark.
The second quarter began with Donald Trump’s ‘Liberation Day’ announcement of reciprocal tariffs on imports from all trading partners. These were quickly postponed for 90 days in an effort to strike trade deals, although few have so far been agreed. The July 9th deadline has been extended to August 1st and it remains to be seen whether tariffs will be implemented in full or if further delays and exceptions are granted. Japan looks set to face 25% tariffs although trade negotiations are ongoing. Despite the sharp spike in policy uncertainty and accompanying volatility in global markets, Japanese equities managed a healthy +4.8% return in the second quarter, in line with developed markets and maintaining the outperformance over the year to date.
While external uncertainty is likely to remain high, most notably around the timing and magnitude of tariffs, the core domestic drivers of Japanese equities continue unabated. CPI has been above the Bank of Japan’s 2% target for more than three years now, printing 3.3% in June, and with that has come a new corporate capex cycle.
The Tokyo Stock Exchange’s governance reforms continue to deliver rising corporate ROE and shareholder returns – share buyback announcements in the April-May with full year results nearly doubled year over year. More companies are announcing plans to improve return on capital, and while balance sheet efficiency has been the most straightforward step, by reducing the complex web of cross-shareholdings and increasing shareholder returns through dividends and buybacks, we are also seeing companies focus on operational improvements that can sustainably raise the return on capital of corporate Japan.
The Liontrust Japan Fund returned 4.9% during the second quarter, in line with the Topix at 4.8%. Dispersion in returns across sectors was high, with communication services (+18%) and technology (+13%) leading the way, while energy (-7%), healthcare (-3%) and financials (-2%) all saw negative returns. Notable contributions came from Nintendo (+34%) with the release of its long-awaited Switch 2 console, Mitsubishi Heavy Industries (+39%) with its exposure to gas and nuclear turbines and defence, and semiconductor equipment supplier Tokyo Electron (+34%). Elsewhere, key contributions to the portfolio came from IT Services company NEC, Modec which builds FPSOs for the oil and gas industry, and Japan Steel Works which makes equipment for nuclear power plants, as well as Nintendo.
We continue to believe that the outlook for Japanese equities remains strong with robust earnings and ongoing corporate governance reform.
Discrete years' performance (%) to previous quarter-end:
|
|
Jun-25 |
Jun-24 |
Jun-23 |
Jun-22 |
Jun-21 |
|
Liontrust Japan Equity C Acc GBP |
4.2% |
16.2% |
8.1% |
-9.4% |
16.7% |
|
TOPIX |
6.5% |
13.1% |
12.4% |
-8.7% |
10.4% |
|
IA Japan |
7.3% |
10.6% |
12.7% |
-11.4% |
13.2% |
|
Quartile |
4 |
1 |
4 |
2 |
1 |
*Source: FE Analytics, as at 30.06.25, primary share class, total return, net of fees and income reinvested.
KEY RISKS
Past performance does not predict future returns. You may get back less than you originally invested.
We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.
- Overseas investments may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of the Fund.
- This Fund may have a concentrated portfolio, i.e. hold a limited number of investments. If one of these investments falls in value this can have a greater impact on the Fund's value than if it held a larger number of investments.
- The Fund may encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings.
- Outside of normal conditions, the Fund may hold higher levels of cash which may be deposited with several credit counterparties (e.g. International banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash.
- Counterparty Risk: any derivative contract, including FX hedging, may be at risk if the counterparty fails.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
DISCLAIMER
This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.
It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets.
This information and analysis is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID) and/or PRIIP/KID, which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.com or direct from Liontrust. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.
Understand common financial words and termsSee our glossary
The Fund aims to maximise total returns (a combination of income and capital growth) over the long term (five years or more) through investment in sustainable securities, primarily consisting of European investment grade fixed income securities. The Fund invests at least 80% of its assets in bonds issued by companies which are denominated in Euro or non-Euro corporate bonds that are hedged back into Euros. The focus is on investment grade corporate bonds (i.e. those which meet a specified level of creditworthiness). The Fund invests in companies that provide or produce more sustainable products and services as well as having a more progressive approach to the management of environmental, social and governance (ESG) issues. Although the focus is on investment grade corporate bonds, the Fund may also invest in government bonds, high yield bonds, cash or assets that can be turned into cash quickly. Where the Fund invests in non-Euro assets, the currency exposure of these investments will generally be hedged back to Euro. Up to 10% of the Fund's currency exposure may not be hedged, i.e. the Fund may be exposed to the risks of investing in another currency for up to 10% of its assets. The Fund may invest both directly, and through the use of derivatives. The use of derivatives may generate market leverage (i.e. where the Fund takes market exposure in excess of the value of its assets). The Fund has both Hedged and Unhedged share classes available. The Hedged share classes use forward foreign exchange contracts to protect returns in the base currency of the Fund.
5 years or more.
3 (Please refer to the Fund KIID for further detail on how this is calculated)
Active
The Fund is considered to be actively managed in reference to IBOXX Euro Corporate All Maturities (the "Benchmark") by virtue of the fact that it uses the benchmark(s) for performance comparison purposes. The benchmark(s) are not used to define the portfolio composition of the Fund and the Fund may be wholly invested in securities which are not constituents of the benchmark.
The Fund is a financial product subject to Article 9 of the Sustainable Finance Disclosure Regulation (SFDR). You can learn more about our implementation of the SFDR here.
KEY RISKS
Past performance does not predict future returns. You may get back less than you originally invested.
We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.
- Overseas investments may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of the Fund.
- The Fund, may in certain circumstances, invest in derivatives but it is not intended that their use will materially affect volatility. Derivatives are used to protect against currencies, credit and interest rate moves or for investment purposes. The use of derivatives may create leverage or gearing resulting in potentially greater volatility or fluctuations in the net asset value of the Fund. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead.
- Credit Counterparty Risk: outside of normal conditions, the Fund may hold higher levels of cash which may be deposited with several credit counterparties (e.g.international banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash.
- Diversification Risk: the Fund is expected to invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
- Liquidity Risk: the Fund may encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings.
- ESG Risk: there may be limitations to the availability, completeness or accuracy of ESG information from third-party providers, or inconsistencies in the consideration of ESG factors across different third party data providers, given the evolving nature of ESG.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
DISCLAIMER
This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.
It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets.
This information and analysis is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID) and/or PRIIP/KID, which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.com or direct from Liontrust. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.
