JOF: The Wide Discount To NAV Looks Set To Reduce

Summary

• Japan Smaller Capitalization Fund which is a Japanese small-cap oriented CEF, has outperformed the US markets and global markets by 2.5-4x this year.
• Conditions for Japanese industrials look relatively healthy, although Trump's threat to impose a tariff of 30-35% doesn't bode well.
• The fund’s wide NAV discount (averaging 18.5% over the past 5 years) may narrow, thanks to a new level distribution plan and potential share buybacks, boosting investor appeal.
• JOF's holdings can also be picked up at a huge P/E discount relative to the large-cap oriented JEF.
• Despite strong momentum, technical indicators suggest caution as JOF approaches a key resistance zone with overbought signals from the RSI indicator.

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Introduction

The $300m-sized Japan Small Capitalization Fund (NYSE:JOF), backed by Nomura Asset Management, has proven to be a very rewarding CEF [close-end fund] for its investors in the first half of 2025. In a year when the US

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