The Commonwealth Japan Fund (CNJFX) fell 3.0% in August 2015 from a month ago. In the three-month and six-month periods ended August 31, the fund fell 1.8% each. However, in the YTD (year-to-date) period, the fund is up by 8.0%. Let’s look at what has contributed to this movement.
Portfolio composition and contribution to returns
The CNJFX fund managers follow the bottom-up approach to investing and portfolio construction. Of its 49 portfolio holdings, 32.7% is invested in the industrials sector. Financials and healthcare stocks make up a combined ~29% of the portfolio.
This large exposure to industrials and financials has been the key reason for a fall in the fund’s returns for August 2015. These two sectors were the key negative contributors to returns for the month. Among the 19 stocks it has invested in the industrials sector, all except five negatively contributed to returns, led by Yamato Holdings (YATRY). Meanwhile, Kajima (KAJMY) was the biggest positive contributor to returns from the industrials sector, thus reducing further negative returns.
CNJFX holds only eight stocks in the financials space, and all negatively contributed to returns for the month, led by The Dai-Ichi Life Insurance Company (DCNSF).
Healthcare was the only sector that positively contributed to returns in August. Two of the three stocks helped reduce a further fall in overall returns. They were led by Asahi Intecc, which happens to be the fund’s single largest stock holding.
Market cap analysis
The fund has 44% of its assets invested in large-cap stocks. They were the highest negative contributors to overall returns following the recent losses. Mizuho Financial Group (MFG), Toyota Motor (TM), and The Dai-Ichi Life Insurance Company were negative contributors to the returns.
Mid-cap stocks, which form 31% of the fund’s portfolio, helped support the fund’s performance with a positive contribution to returns led by Asahi Intecc.
In the next article, we’ll look at the Fidelity Advisor Japan Fund – Class A (FPJAX).
The Fidelity Advisor Japan Fund - Class A (FPJAX) fell 5.4% in August 2015 from a month ago. It was the second steepest fall among the six funds under review in this series.
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