Singapore-based Four Seasons Asia Investment has announced the forthcoming launch of a long-only Japan Ucits fund in September 2018 with the aim of rendering the strategy available to a wider range of investors.
The fund will be run by Four Seasons’ founders an co-chief investment officers, CEO Shigeka Koda and managing director Kahori Ando. Koda spent 14 years at Goldman Sachs as Japanese equity senior portfolio manager while Ando worked 12 years at Sparx Asset Management in a similar role.
The non-benchmarked strategy seeks to invest in companies with the most attractive risk/return profile for its investors by maximising upside potential and minimising downside risk.
The firm applies a bottom-up approach and searches companies in less crowded markets, in particular mid-small cap ones, which are under-researched and more impacted by rapid change. Though the manager specifies that even if the fund carries a mid-small cap bias, it is not a small cap strategy.
Commenting on the launch, Shigeka Koda said: “Global financial markets have been looking for a source of alpha since the end of the central banks’ ultra-easy monetary policy. Japanese equities are the third largest globally in terms of market cap, but the sector has been neglected by international investors for three decades. With deflation now leaving the system, demographic, technological and regulatory changes are combining to kick-start the Japanese economy.
“In particular, labour shortages and rising demand for labour will result in productivity improvements, rising wages, better management practices and increasing economic growth which will benefit Japanese equity markets and create significant opportunities to generate alpha. We focus on capturing change as a source of return, and the major changes underway in Japan are creating similar opportunities in Japanese equities as existed in U.S equities in the 1980s.”
Koda added: “After three decades of stagnation, it is understandable that Japanese equities are underweight in many international investor portfolios. But profound changes are now underway in the Japanese economy and in the Japanese society, this translates to the awakening of the sleeping giant. We believe that this is a ‘Godzilla’ moment for Japan when all these mega-trends combine to create massive changes and major opportunities for experienced Japan investors.”