We are delighted to announce that the EI Sturdza Strategic Japan Opportunities Fund was awarded the 'Best New Launch – Equity' prize at the 2018 Investors Choice Awards in London on the 13th March 2018.
The award recognises the Fund’s performance since launch, taking into account a number of both qualitative and quantitative criteria and is judged by a panel of independent institutional investors. Further information on the Award Methodology can be found at the bottom of this article.
The Strategic Japan Opportunities Fund, managed by portfolio manager Mitsuhiro Yuasa and his team at Rheos Capital Works Inc., was launched in March 2017 and seeks to generate alpha by outperforming the Benchmark Index over the long term.
The portfolio management team look to invest in companies with consistent revenue / profit growth and strong management regardless of size, history, brand or market capitalisation in the Japanese market, utilising a disciplined bottom-up approach, combined with a macroeconomic view overlay, remaining flexible and dynamic in order to ensure the investment portfolio is positioned so as to take advantage of prevailing and developing market opportunities.
The result of the team’s approach to investing in Japan, is a benchmark agnostic portfolio containing approximately 60 to 90 stocks – reducing stock-specific risk, with a focus on growth companies, irrespective of sector or market capitalisation, with a minimum of +25% to their intrinsic value as per their internal assessment.
Since inception the Fund has returned over 27% to investors on an absolute basis, representing relative performance compared to its benchmark index of +12%.
From a portfolio positioning perspective, the Fund is currently exhibiting a bias towards IT, Industrial and Material stocks, whilst being underweight in Consumer Staples, Health Care and Financials.
Japan’s economy currently ranks third largest globally, in terms of nominal GDP standing at approximately USD 4.4 trillion1. While the Japanese equity market has largely been considered as a laggard since the 1990’s, it should be noted that there have been pockets of the markets particularly in the less covered small and mid cap space, that were able to deliver solid returns to investors.
In this context it is worth considering that Japanese markets were volatile during the period from 2003 to 2012, especially in terms of large cap stocks as represented by the TOPIX Core 30; however on further analysis one will note that during this 10 year period 66% (1705) of Japanese listed companies rose, with an average return of 110%, most of which were Small and Mid Cap growth companies (excluding the financial sector)2.
By contrast, since the introduction of Abenomics, the Japanese equity markets have benefited from a strong rally, with 92% of listed Japanese companies, 3109 (excluding financials) rising, with an average return of these companies of 127%3.
Against this backdrop the team focuses on investments in growing companies in the “New Japan” – new technologies for example which are under-researched / covered by professional investors, which they commonly identify in the small and mid cap space; however it should be noted that the team will invest across the market spectrum should investments be identified that satisfy their established investment criteria.
The below highlights the divergence in the return profile of the various Japanese market cap indices4:
|MSCI Japan Small Cap BGR LCL||22.0||14.3||97.71||72.93||-14.42||10|
|MSCI Japan MId NR LCL||18.4||15.4||97.89||95.82||-22.86||13|
|MSCI Japan NR LCL||17.2||16.2||98.60||105.38||-26.01||15|
|TOPIX TR Index||14.5||13.0||100.00||100.00||-23.86||12|
Mitsuhiro Yuasa, portfolio manager of the Strategic Japan Opportunities Fund, outlines the background to Rheos Capital Works and the partnership with EI Sturdza to form the Fund. Yuasa also provides an overview of their investment process, philosophy and strategy.
If you require any additional information on the Strategic Japan Opportunities Fund, please contact:
Head of Client Relations
+44 1481 722 322
INVESTORS CHOICE AWARD METHODOLOGY
Investors Choice do not believe that risk can simply be defined by realized performance measures such as volatility and that unrealized risk also needs to be taken into account. As such, when defining the nominees and winners of their awards, they collaborate with some of the most established institutional investors around the world to incorporate qualitative criteria into the selection process.
The scoring methodology incorporates a set of qualitative criteria covering the investment process, risk management framework and depth of research team, as well as a set of quantitative performance measures including annualized returns, volatility and maximum drawdown.
The judges review manager profiles on the Allocator portal and independently assign a score from 1 to 10 in each of the qualitative assessment areas for each fund. Average scores for the qualitative and quantitative sets of criteria are then calculated and combined in equal measure to reach the total score. This total score determines the winner in each category.
Further information can be found on the Investors Choice Awards website.
1 Source: International Monetary Fund, World Economic Outlook, April 2017.
2 Source: Bloomberg. All figures are displayed in JPY for the period from 31 December 2002 through to end of December 2012. The financial sector was excluded from analysis, as companies in the sector do not have operating profits, which is the focus of Rheos’ investment strategy.
3 Source: Bloomberg. All figures are displayed in JPY for the period from 31 December 2012 through to end of January 2017. The financial sector was excluded from the analysis, as companies in that sector do not have operating profits, which is the focus of Rheos’ investment strategy.
4 Source: Morningstar Direct. Data for a 5 year period to the end of December 2017. Please note that past performance is not indicative of future returns.
This communication is issued in Guernsey by E.I. Sturdza Strategic Management Limited which is regulated by the Guernsey Financial Services Commission. Any investments or investment services mentioned on this communication are not intended for retail customers. Consequently, this communication is only made available to professional investors and eligible counterparties and should not be relied upon by any person that does not possess professional experience in relation to investments. If you are in any doubt as to whether you possess suitable experience in relation to investments please consult your financial adviser. Under no circumstances should this document be forwarded to anyone in the United Kingdom who is not a professional client or eligible counterparty as defined by the FCA. Further the information contained in this communication does not represent a research report. E.I. Sturdza Strategic Management Limited has not considered the suitability of investment against your individual needs and risk tolerance. Shares in the Fund should only be purchased by persons with professional experience and investors should refer to the Fund Prospectus and/or KIID for detailed information about potential risks involved in investing in financial instruments as well as the latest half-yearly report and unaudited accounts and/or annual report and audited accounts. The information contained herein is estimated, unaudited, may be subject to change and reflects the performance of the relevant fund offered by E.I. Sturdza Strategic Management Limited during the period indicated. Any opinions or estimates expressed herein are at the date of preparation and are subject to change without notice; however no such opinions or estimates constitute legal, investment, tax, or other advice. Individual performance of the Fund may vary and historical data is not an indication of future results. The value of the Fund and the income which may be generated from it can go down as well as up and therefore investors must be able to bear the risk of a substantial impairment or loss of their entire investment. The Swiss Representative and Swiss Paying Agent is Banque Eric Sturdza SA, Rue du Rhône 112, P.O. Box 3024, CH-1211 Geneva 3. Copies of the Prospectus, KIID, articles of association, annual and semi-annual reports may be obtained free of charge at the seat of the Swiss representative or at www.eisturdza.com. This document is intended for information purposes only and is not intended as an offer or recommendation to buy, sell or otherwise apply for shares in the Fund. E.I. Sturdza Strategic Management Limited, 3rd Floor, Frances House, Sir William Place, St Peter Port, Guernsey GY1 1GX. Part of the Eric Sturdza Banking Group. Company Registration Number: 35985.
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