Alma Eikoh Japan Large Cap Equity Fund
- Alma Eikoh Japan Large Cap Equity Fund invests in a concentrated number of Japanese equities selected through a “bottom up” process.
- The fund’s management is delegated to Eikoh Research Investment Management.
Cumulative Performance (%)
Fund Inception 12 June 2014
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
Strategy & Manager
Investment objective: to seek long- term capital growth by investing generally in Japanese large cap stocks (with market capitalization in excess of US $1bn)
- Investment process: Analyse long-term company fundamentals through extensive in-house bottom up research with a strong risk management ethos.
- Portfolio of around 25-30 companies which are well managed, profitable and with good prospects. Portfolio managers believe that Cash Flow Return on Investment and value creation are key.
- Benchmark: Topix
ERIM LLP: firm founded by the Japanese equity fund management team at Deutsche Asset Management in London, as part of a supported spin-out from Deutsche Bank. Regulated by the FCA and the SEC.
- Eikoh focuses on research and investment in Japanese listed companies
- The portfolio managers have worked together for over 15 years
- Eikoh has both institutional and high net worth individual clients. The firm manages circa US$1.3 bn in long-short and long-only strategies (subscribed assets)
James Pulsford – Chief Executive and Chief Investment Officer
James started his career at Morgan Grenfell in 1987, moving to Japan shortly thereafter. During his 12 years in Tokyo, he went on to become the Head of the Small Cap Equity team. James returned to London in 1999 where he managed a number of Japanese large cap products for what became Deutsche Asset Management. As well as various Japanese long only mandates, James has developed the Equilibria Japan long/short strategy at this time. James now has over 30 years’ experience investing in Japan and speaks fluent Japanese. He holds a BA from Oxford University.
Sara Gardiner-Hill – Senior Portfolio Manager
Sara is one of the founding members of Eikoh and has been with the firm since inception. Prior to the establishment of Eikoh, Sara had been with Deutsche Asset Management since 2001 where she was a portfolio manager for the Japan long/short strategy since its inception in 2002, as well as a portfolio manager for the Investment Manager’s long only mandates. After leaving university, Sara spent 3 years in Japan working and learning Japanese before moving back to the UK to start her career in investment management. Sara is a CFA Charter holder as well as a Fellow of the Securities Institute and holds a BA from Oxford University.
Karl Hammond – Portfolio Manager
Karl formally joined James and Sara in 2009 although he had been working closely with them since he joined Deutsche Bank in 2003. Karl initially managed a number of Japanese and Global funds within the Deutsche Bank $2bn Global Diversified business and DB Global Investment Management’s $3bn institutional and private client equity business. Karl is a CFA Charter holder and holds a first class BA from the University of Nottingham.
Statistics & Commentary
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Sector Breakdown as a % of AUMas of 31/12/2018
Portfolio Characteristicsas of 31/12/2018
|No. of securities||28||2112|
|Weighted Average Market Cap (¥ bn)||4302||2987|
|Median Market Cap (¥ bn)||1993||45|
|Dividend Yield (%)||2.7||2.5|
|Historical Price / Earnings||11.1x||11.7x|
|Historical Price / Cashflow||8.3x||7.5x|
|Historical Price / Book||1.x||1.1x|
|Volatility since inception (%)||20.7||19.1|
|Sharpe ratio since inception (%)||2.0||1.7|
|Active share (%)||83.4||-|
|Beta since inception||1.04||-|
|Tracking error since inception (%)||5.6||-|
|Information ratio since inception||1.7||-|
Top 10 Position Detailsas of 31/12/2018
|Security name||Sector||% AUM|
|TOYOTA MOTOR CORP||Consumer Discretionary||8.03|
|MITSUBISHI UFJ FINANCIAL GRO||Financials||6.55|
|SUMITOMO MITSUI FINANCIAL GR||Financials||5.62|
|MITSUBISHI ESTATE CO LTD||Real Estate||5.41|
|FUJITSU LTD||Information Technology||4.33|
|MITSUI FUDOSAN CO LTD||Real Estate||3.96|
|DAIICHI SANKYO CO LTD||Health Care||3.83|
|SHIN-ETSU CHEMICAL CO LTD||Materials||3.65|
|M3 INC||Health Care||3.53|
Investment Manager's Commentaryas of 31/12/2018
Market Review and Outlook
Topix slumped by 10.4% during December, falling along with global markets led by the US. The arrest of Huawei’s CFO in Canada following a US extradition request was one factor behind the weakness and sentiment was not helped by the partial Government shutdown in the US as a result of the stand-off between President Trump and the House of Representatives over funding of a border wall with Mexico. In Europe the apparent drift of the UK towards a “no deal” hard Brexit and violent mass demonstrations in France by the “Gilets Jaunes” did nothing to lighten the mood. Amid the market turbulence the Yen strengthened, closing the month up from Y/$ 113.6 to 109.7. A feature of the month was very heavy selling by overseas investors of Y2trn making a total of Y13.3trn for the year as a whole, a value coming close to matching the record inflows of Y15.7trn recorded in 2013.
Domestic economic statistics announced over the month were on balance a little disappointing. The second set of preliminary Q3 GDP figures were very weak showing real GDP down -2.5% QoQ annualised, a revision down of -1.2% from initial estimates with weaker capital spending the main element. The BOJ Tankan business conditions survey showed little change in current conditions however the outlook deteriorated with the large manufacturers’ diffusion index slipping from +19 to +15. Industrial production fell by -1.1% MoM in November however the Economy Watchers Survey registered an improvement in current conditions from 47.7 to 49.0 in November and the Japanese manufacturing PMI was up by +0.2 to 52.4 in December.
While global growth was robust in 2018, recent market turmoil reflects investor concern over the sustainability of these positive conditions in the face of rising trade tension between the US and China, the withdrawal of central bank stimulus in the US, political disarray in Europe and signs of slowing growth in China. We continue to expect that trade relations between the US and China and the underlying strength of the Chinese economy will remain key determinants of stock
market performance. Looking at Japan in isolation, we expect the Abe administration to further enhance the pro-business and growth policies that have characterised it so far. Abe and his team are keen to ensure that domestic economic momentum is sufficiently robust in the autumn such that the planned consumption tax increase from 8% to 10% does not bring economic expansion to a halt. The announcement that Japan will spend an additional Y3trn on
infrastructure repair is part of this strategy and should result in growth in public works spending of around 20% in fiscal 2019. Abe aims to restore the economy to sufficient health while he remains Prime Minister to allow the BOJ to start to taper its stimulus from a position of strength.
Fund performance in 2018 was very disappointing and as we look into the year ahead we hope to see a market that is more fundamentally driven after an unusually long period where other factors have played a major role in stock price movements. It seems likely to us that the record levels of foreign investor disinvestment experienced in 2018 was a major factor behind the unusual market characteristics exhibited over the year, leaving the impact of BOJ buying and
the activity of domestic investors the dominant influence in securities price setting. A cessation or reversal of negative foreign flows might thus presage a change in market characteristics. We see the current market dislocation as providing an opportunity for bottom-up research and stock picking and expect to add value as the situation normalises. The market is trading at 1.09x book, on an estimated PER of 11.8x and a dividend yield of 2.48%
The Fund fell 11.36% (I JPY C share class) in December, underperforming Topix which fell by 10.21% (dividends reinvested). The Fund’s underperformance during the month was driven in large party by asset allocation where performance was hurt by being overweight semiconductors & semiconductor equipment and banks and having no exposure to more defensive sectors such as transportation, household & personal products and utilities. Stock selection was a minor negative overall with positive contributions within software & services, semiconductors & semiconductor equipment and energy more than offset by negative contributions from healthcare equipment & services, retailing and commercial & professional services.
At the stock level the largest detractors were Persol Holdings, Komatsu and M3 which all fell relative to the market but in the absence of any company specific news. The position in J-Front Retailing also detracted from returns on the back of disappointing third quarter results impacted by natural disasters and up-front spending; we expect a recovery in the business in 2019. The largest positive contributors were Fujitsu on heightened expectations of profit improvement driven by internal reforms as well as upcoming 5G investment, Mitsubishi Estate, Ajinomoto, Mitsubishi Corp and Toyota Motor.
During the month we established a position in TDK where the prospect for the Company’s core lithium polymer battery division is strong as they penetrate further into smartphones, laptops and also into newer areas such as drones, wearables and power tools. The Company’s passive components are also performing strongly and this looks set to continue over the medium term on the back of the link-up with Qualcom as well as increasing demand for capacitors in autos. This purchase was funded in part by reducing the positions in Murata and Rohm, both of which have outperformed TDK sharply over the past three months. Within real
estate we shifted some Mitsubishi Estate into Mitsui Fudosan based on relative performance and valuation. We scaled back the position in Fujitsu after the relative rebound in December however still retain a sizeable position here. We reduced the position in Zozo on concerns about near term performance and strategy in the wake of their scaled back private brand initiatives and added to the position in Nintendo after a period of weak relative performance, encouraged by solid hardware and software sales over the holiday season.
Facts & Documents
Fund Domicile: Luxembourg
Management Fee: 0.90% p.a. for I shares
Fund Type: UCITS SICAV
Fund Launch: 12 June 2014
Base Currency: JPY
Depositary, Administrator, Transfert Agent: BNP Paribas Securities Services (LU)
Dealing: Each day with 1-day notice
Cut-off time: 12 pm CET
Management Company: Alma Capital Investment Management (LU)
Investment Manager: ERIM LLP (London, UK)
Fund Managers: James Pulsford, Sara Gardiner-Hill, Karl Hammond
Countries where the fund is registered:
Austria, Germany, Italy, Luxembourg, Switzerland, United Kingdom, France, Singapore
Institutional USD Hedged Capitalisation share class
ISIN: LU1013117160 Ticker: AEJIUHA LX Launch: 12 Jun 2014
Institutional GBP Hedged Capitalisation share class
ISIN: LU1013116949 Ticker: AEJIGHA LX Launch: 12 Jun 2014
Institutional EUR Hedged Capitalisation share class
ISIN: LU1013116782 Ticker: AEJIEHA LX Launch: 10 Dec 2014
Institutional JPY Capitalisation share class
ISIN: LU1013116519 Ticker: AEJPIJA LX Launch: 10 Dec 2014
Institutional GBP Unhedged Capitalisation share class
ISIN: LU1152097108 Ticker: AEKJEGC LX Launch: 17 Feb 2015
Institutional CHF Hedged Capitalisation share class
ISIN: LU1210049091 Ticker: AEJICHC LX Launch: 14 Feb 2018
- Articles of Association
- Prospectus - Other languages available upon request
- List of subcustodians
- Audited annual report
- Semi-annual report
- Monthly reports
available upon request
- Class I EUR hedged C
- Class I GBP C
- Class I GBP hedged C