The higher quality companies that Aberdeen Japan Equity Fund holds have continued to post firm earnings and helped the Fund remain resilient through these unprecedented times.
Last year, we decided to shift a larger proportion of the portfolio to small caps. This year, however, small caps have borne the brunt of the sell-off, as this portion of the market is a lot less liquid. Instead, it is our holdings in mid to larger cap companies that have been our stronger performers. The companies that we hold here are all industry leaders that have historically fared well in difficult times.
With the sell-off in the markets, we are looking to build new positions in various opportunities, whilst also exiting holdings that may struggle in this environment. We have also been adjusting positions, adding to higher quality names that have been indiscriminately sold off, whilst trimming those with nearer-term concerns.
For many of Japan's globalized companies, the impact of the coronavirus pandemic is expected to have a significant impact, at least in the near term. Whilst earlier assessments of the impact was focused on a disruption of the global supply chain for a handful of industries, the spread of the pandemic has now impacted the operations of every industry across the globe.
The majority of Japanese companies however will weather this downturn: they retain strong balance sheets, and they have endured multiple disruptions in the past. The fundamentals of the portfolio companies remain intact. We believe the market has been indiscriminate during this sell-off, and we intend to be opportunistic amidst this uncertainty.
To learn more about Aberdeen Japan Equity Fund (JEQ), visit aberdeenjeq.com.
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries. Concentrating investments in the Japan region subjects the Fund to more volatility and greater risk of loss than geographically diverse funds.
Equity stocks of small and mid-cap companies carry greater risk, and more volatility than equity stocks of larger, more established companies.
Closed-end funds are traded on the secondary market through one of the stock exchanges. The Fund’s investment return and principal value will fluctuate so that an investor’s shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the fund’s portfolio. The Net Asset Value (NAV) is the value of an entity’s assets less the value of its liabilities. The Market Price is the current price at which an asset can be bought or sold. There is no assurance that the Fund will achieve its investment objective. Past performance does not guarantee future results.
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