Nippon Active Value Fund PLC on Tuesday said it outperformed the ‘essentially flat’ MSCI Japan Small Cap index, and remains confident in its ‘highly selective, concentrated approach’.

The Japan-focused investment firm, also known as NAVF, said its net asset value was 179.3 pence per share at June 30, up from 169.2p at December 31.

For the first six months of this year, Nippon Active Value’s NAV total return was positive 6.9%, a slight improvement from the positive 6.7% it delivered the previous year.

The MSCI Japan Small Cap index meanwhile delivered a positive 0.1% total return, ‘essentially flat’ compared with the prior year’s positive 0.4%.

NAVF did not however declare an interim dividend, unchanged from the year before.

‘The broad Japanese index, TOPIX, reached a new high in June 2024, finishing the period 6.2% above the level on 1 January 2024,’ Nippon Active commented. ‘The market was led by large-cap stocks, and supported by an increased allocation to Japan by global investors, both active and passive, as well as buying by domestic investors in Nippon Individual Savings Accounts...Last year, the government implemented changes to NISA accounts which have made these investment vehicles far more compelling, particularly given the changes in the inflation outlook.’

Looking ahead, NAVF’s investment adviser ‘continues to identify new opportunities in both the small and mid-cap sectors’.

‘We are encouraged by the more positive sentiment towards Japanese equities this year amongst both domestic and international investors and by the increased willingness of domestic investors to vote against managements that have failed to meet key productivity/return targets,’ the firm continued.

‘Ours is a highly selective, concentrated approach and we expect the fund’s returns to be relatively lowly correlated to the broader Japan equities market. Even if investors’ focus shifts to opportunities away from Japan, we are confident that our activist approach will continue to perform well.’

Also on Tuesday, NAVF said that a fund advised by Bain Capital Private Equity LP has launched a tender offer to acquire all shares in portfolio company Trancom Co Ltd. NAVF has agreed to tender its existing holding in Trancom.

NAVF said it and certain co-investors have agreed with the fund’s offering vehicle that they will reinvest some of their tender offer proceeds for 10% of the unlisted equity in the vehicle’s holding company.

‘NAVF believes that Trancom has a bright future under its new ownership, a future which NAVF is pleased to remain part of,’ the firm commented.

Shares in Nippon Active Value were 1.4% higher at 178.00p each on Tuesday afternoon in London.

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