AJOT’s 2025 results: bigger, busier, and bolder after the FJV combination
AVI Japan Opportunity Trust (AJOT) closed 2025 with solid gains, a step-change in scale and a fatter dividend stream. The trust’s Net Asset Value (NAV) rose to £425.3 million with a NAV total return of 14.7% in sterling. The share price total return was 15.3%.
AJOT did trail its comparator benchmark, the MSCI Japan Small Cap Index, which returned 19.8% in 2025. But the strategic story advanced meaningfully: the merger with Fidelity Japan Trust (FJV) lifted assets above £400 million and enhanced AJOT’s firepower for shareholder engagement in Japan’s reforming small-cap market.
Quick-scan numbers that matter
| Metric (year to 31 Dec 2025) | Result |
|---|---|
| NAV | £425,291,000 |
| NAV per share | 174.7p |
| NAV total return | 14.7% |
| Share price total return | 15.3% |
| Benchmark (MSCI Japan Small Cap, £ TR) | 19.8% |
| Profit before tax | £41.9m |
| Investment income | £6.3m |
| Total earnings per share | 28.14p (2.94p revenue, 25.20p capital) |
| Ordinary dividends per share | 2.20p |
| Special dividends per share | 0.60p |
| Proposed final dividend | 0.60p (ex-div 23 Apr 2026, record 24 Apr, pay 22 May) |
| Ongoing charge | 1.4% (down from 1.5%) |
| Discount to NAV at year-end | 1.6% |
| Portfolio net cash as % of market cap | 12.3% |
| Net Financial Value (cash and securities) as % of market cap | 37.8% |
| Portfolio EV/EBIT | 9.5x |
| Portfolio free cash flow yield | 5.9% |
Jargon watch: NAV is the per-share value of the underlying portfolio. A discount means the shares trade below NAV. EV/EBIT is a valuation multiple comparing enterprise value to operating profit. Net Financial Value (NFV) is effectively surplus cash and listed securities on balance sheets.
Why the FJV merger is a big deal for shareholders
Approximately 68% of FJV holders rolled into AJOT in November, taking the trust well past £400 million of assets. Scale matters in two ways here. First, AVI can now build larger positions and be more influential in engagements. Second, the management fee moves to a tiered rate above £300 million and AVI continues to reinvest 25% of its fee into AJOT shares. Combined with economies of scale, the ongoing charge has already edged down to 1.4%.
Liquidity, buybacks and an annual redemption mechanism also help keep the discount tight. In 2025, 11.05% of shares were redeemed at a 2% discount to NAV under the trust’s exit facility, while AJOT also bought back 3,625,000 shares and issued 110,674,880 new shares to FJV investors.
Performance context: under the benchmark, still on plan
AJOT’s 14.7% NAV total return was respectable, especially with a weak yen and a late-year market rotation favouring large-cap exporters. The benchmark’s 19.8% reflected that tilt. Since inception in October 2018, AJOT’s NAV total return is 94.8% versus 48.0% for the benchmark – a 46.8% relative gain. That longer-run delivery supports the strategy of owning under-researched, asset-backed small caps and pushing for change.
Engagement highlights: catalysts in action
- TSI Holdings: sold real estate worth about 30% of market cap, then executed a 15.3% buyback. AJOT exited in July with a 92% ROI across the holding period.
- Tecnos Japan: taken private at a 39% premium; AJOT had been the largest shareholder.
- Eiken Chemical: a shareholder proposal passed with a supermajority, expanding how dividends can be set.
- Synchro Food: an EGM led to AVI’s Head of Japan Research joining as an independent director and internal board changes.
- Broadmedia: AVI launched a tender at a 29% premium and, post year-end, lifted the stake to 43%.
- Wacom: public campaign “Draw Wacom’s Future” plus shareholder proposals; another constructive investor disclosed a 5% stake.
This is the repeatable edge: find cash-rich or mispriced businesses and use friendly but firm engagement to unlock value.
What AJOT owns now: concentrated and cash-backed
Top positions include Mitsubishi Logistics (7.5% of net assets), Kurabo Industries (7.3%), Eiken Chemical (6.0%), Raito Kogyo (5.9%) and Sharingtechnology (5.9%). The top 10 represent 64.0% of NAV. Many holdings are overcapitalised, giving scope for buybacks, higher dividends or strategic refocusing. The portfolio trades at 9.5x EV/EBIT with 37.8% of market cap covered by NFV – attractive, if engagement delivers.
On the flip side, a few names dragged: Aoyama Zaisan Networks (-132 bps contribution) after guidance was trimmed, and a flat Mitsubishi Logistics during a buyback period. That is the nature of concentrated investing – single-name moves can be punchy quarter to quarter.
Dividend uplift and balance sheet firepower
Income investors get more this year. Total dividends for 2025 come to 2.80p per share, including a special 0.60p already paid and a proposed 0.60p final. With a bigger asset base and improving fee terms, there is a clear path to sustaining distributions, though the trust’s focus remains capital growth.
Gearing is modest. AJOT had a ¥6.6 billion facility fully drawn at year-end, with net gearing at +1.8%. A new ¥12.7 billion two-year facility has been approved and is going through legal review, adding optionality to lean in when catalysts line up.
The macro and governance backdrop: winds still in AJOT’s sails
Japan’s reform engine keeps whirring. The Tokyo Stock Exchange’s push on capital efficiency, the Corporate Governance Code review, and a rise in activism and private equity interest continue to reshape small caps. Political clarity following the 2026 election adds stability. Key tailwinds include unwinding cross-shareholdings and a friendlier stance toward unsolicited bids.
Near-term, the yen and the rotation to large-cap exporters are headwinds to relative returns. But AJOT’s hunting ground – domestic small and mid caps with surplus assets and fixable issues – remains fertile.
Risks, watch-outs and the calendar
- Benchmark rotation risk – if large-cap exporters keep running, relative returns may lag.
- Engagement execution – outcomes and timing are inherently uncertain.
- Currency – a weak or volatile yen affects sterling returns.
Dates to note: AGM at 11.30 a.m. on Tuesday, 5 May 2026, and the 0.60p final dividend timetable (ex-div 23 April, record 24 April, pay 22 May). The board now considers an annual exit opportunity, with the next potential window in October 2026.
My take: credible compounding, now at scale
There is a lot to like. The combination with FJV enhances influence and lowers costs. The portfolio remains valuation-friendly with real balance sheet support. Engagement results in 2025 – from buybacks to board changes and take-privates – show the playbook working.
The main negative is the 2025 underperformance versus the benchmark, largely a style and currency headwind. If you buy AJOT, you are backing AVI’s ability to drive company-level change rather than chasing macro beta. On that score, the evidence since 2018 is compelling.
Net-net, AJOT looks well positioned for 2026: bigger, nimbler, and still finding catalysts. If you want targeted exposure to Japan’s small-cap reform story with an activist toolkit, this remains a high-quality option to research further. For documents and updates, see the company’s website at www.ajot.co.uk.
