Aberdeen Closed-End Funds
FOR US INVESTORS ONLY
Important Information:
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. There is no assurance that the Fund will achieve its investment objective. Past performance does not guarantee future results.International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and differences in accounting methods; these risks are generally heightened for emerging market investments.Concentrating investments in the specific regions subjects the Fund to more volatility and greater risk of loss than geographically diverse funds.Fixed income securities are subject to certain risks including, but not limited to: interest rate (changes in interest rates may cause a decline in the market value of an investment), credit (changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral), prepayment (debt issuers may repay or refinance their loans or obligations earlier than anticipated), and extension (principal repayments may not occur as quickly as anticipated, causing the expected maturity of a security to increase).The Fund’s use of leverage exposes the Fund to additional risks, including the risk that the costs of leverage could exceed the income earned by the Fund on the proceeds of such leverage. Additionally, in the event of a general market decline in the value of the Fund’s assets, the effect of that decline will be magnified in the Fund because of the additional assets purchased with the proceeds of the leverage.Your portfolio may not have the same asset class weightings. Asset class weightings are subject to change.Diversification does not ensure a profit or protect against a loss in a declining market.Some of the information in this document may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies. These statements are only predictions and actual events or results may differ materially. The reader must make his/her own assessment of the relevance, accuracy and adequacy of the information contained in this document, and make such independent investigations, as he/she may consider necessary or appropriate for the purpose of such assessment.Any opinion or estimate contained in this recording is made on a general basis and is not to be relied on by the reader as advice. Neither ABRDNnor any of its agents have given any consideration to nor have they made any investigation of the investment objectives, financial situation or particular need of the reader, any specific person or for any loss arising whether directly or indirectly as a result of the reader, any person or group of persons acting on any information, opinion or estimate contained in this document.
Aberdeen Closed-End Funds
5 Minutes on JEQ
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In this episode, Chern Yeh-Kwok joins Mike Taggart to discuss the abrdn Japan Equity Fund, Inc. In just five minutes, Chern addresses three questions investors should be considering: why Japan, why now, and why JEQ?
For more information on JEQ, visit abrdnjeq.com.
To get in contact with us, send us an email at investor.relations@abrdn.com or give us a call at +1 (800) 522-5465.
Mike Taggart
Welcome to the latest podcast for the Aberdeen, Japan Equity Fund, ticker symbol JEQ. I'm Mike Taggart. Aberdeen's US closed and fund specialist. Today we have Chern Yeh-Kwok, Aberdeen's head of Japanese equities and the portfolio manager on JEQ. Chern, thank you for joining us today.
Chern Yeh-Kowk
Thank you for inviting me.
Mike
Chern, I have two questions for you. The first is why Japan? Why should U.S. investors invest in Japan?
Chern
When you invest in any market, you are investing in companies and there will be winners and losers amongst companies and industries. And in Japan's case, of course, you have companies that have pricing power. If companies that see strong demand for their services and products. So despite years of deflation, some companies have actually raised prices. You know, despite the deflationary environment.
And if you're a Japanese multinational company, prices or the products outside of Japan have actually risen. Right. So other macro level issues to do with an aging society. You know, many Japanese companies have expanded abroad, which allows them to continue growing. And these days, inbound tourism has contributed to stronger demand in the domestic economy. Now, the high level of that at the country level, at the company level, companies have plenty of cash. They're very strong balance sheets. And you know, Japan has one of the deepest single country markets in the world with more than 3000 listed companies. But the perennial question for investing, you know, then it's also why now?
Right. And we see several positive structural changes that are underway in Japan. Okay. So firstly, Japan is seeing an end to deflation. So deflation, as we discussed earlier, has plagued Japan for decades. Right? but this is changing, you know, due to a number of factors, and that includes geopolitics and the fragmentation of supply chains, shortage of domestic labor, you know, a weaker currency, right? All of which has changed mindsets in Japan and leads to an improving outlook for companies. Now, the last point, which we think is very important, you know, in terms of why now is that valuations are still attractive in Japan.
Now valuations for Japan equities were definitely cheaper a couple of years ago. But you can say that about valuations in most markets these days. But you have to bear in mind that these structural changes represent a change in how investors should view the market and that these changes are unlikely to reverse. Right. And a number of companies that are changing had to be a narrow group before.
But increasingly we are seeing more opportunities emerge. And what this then means is that, you know, you have a wider opportunity set and you can fish around for companies with more attractive valuations.
Mike
Well, thanks. Chern. And I mean, I think that's a really good overview of why Japan. So my second question is, aside from the discount, why this fund? Why JEQ?
Chern
So JEQ, just to give you some background, is is an active all cap portfolio that focuses on quality companies with sustainable structural growth opportunities. that is aligned with Aberdeen's investment philosophy of investing in good quality companies.
Right? And it is a portfolio that's built from the bottom up, based on our due diligence of companies across the market, cap range in Japan. And we believe that active management with corporate engagement, which includes an active proxy voting policy, is additive alongside the tailwind of governance improvements within the market. So what our investment philosophy has led us to are companies that have structural growth opportunities and a decent multi-year opportunities.
In addition, there is also an attractive distribution rate on the fund. One question that we often get is what about currency? Because most of the investors in this fund, I presume would probably be, you know, us investors or, or US dollar based investors, as mentioned earlier, the way that we do with the currency is to assess the underlying business to ensure that a weakening or conversely, a strengthening yen is not a business risk for invested holdings.
What this means is that the underlying earnings or the portfolio holdings are not reliant on foreign exchange fluctuations, and we believe this is the most appropriate way to control the risk of the fluctuating yen and ensure that we can capture the longer term opportunities within the Japanese market.
Mike
Well, thank you, Chern, for that update on Japan and JEQ.
It's always a pleasure speaking with you. And thank you everyone for listening to this podcast. There are three convenient ways to learn more about JEQ on the internet. Visit abrdnjeq.com. Email us at Investor.relations@abrdn.com, or give us a call at 1-800-522-5465. I'm Mike Taggart of Aberdeen. Thank you for listening.
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This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for informational purposes only and should not be considered as an offer, investment, recommendation or solicitation to deal in any of the investments or products mentioned herein and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication, and do not necessarily reflect those of Aberdeen.
The company's discussed in this podcast have been selected for illustrative purposes only, or to demonstrate our investment management style, and not as an investment, recommendation or indication of their future performance. The value of investments and the income from them can go down as well as up, and investors make it back less than the amount invested. Past performance is not a guide to future returns, return projections or estimates, and provide no guarantee of future results.