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: seek long-term capital growth by investing generally in Japanese large cap stocks (with market capitalisation 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 Institutional and professional clients. The firm manages circa US$ 900m 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 30/04/2019
Portfolio Characteristicsas of 30/04/2019
|No. of securities||28||2136|
|Weighted Average Market Cap (¥ bn)||4179||3382|
|Median Market Cap (¥ bn)||2188||47|
|Dividend Yield (%)||2.4||2.4|
|Historical Price / Earnings||12.5x||13.7x|
|Historical Price / Cashflow||8.8x||8.4x|
|Historical Price / Book||1.1x||1.2x|
|Volatility since inception (%)||20.5||18.8|
|Sharpe ratio since inception (%)||3.1||2.4|
|Active share (%)||83.2||-|
|Beta since inception||1.05||-|
|Tracking error since inception (%)||5.7||-|
|Information ratio since inception||3.1||-|
Top 10 Position Detailsas of 30/04/2019
|Security name||Sector||% AUM|
|MITSUBISHI UFJ FINANCIAL GRO||Financials||6.19|
|TOYOTA MOTOR CORP||Consumer Discretionary||5.67|
|JXTG HOLDINGS INC||Energy||5.15|
|SUMITOMO MITSUI FINANCIAL GR||Financials||4.78|
|SHIN-ETSU CHEMICAL CO LTD||Materials||4.44|
|DAIICHI SANKYO CO LTD||Health Care||4.33|
|M3 INC||Health Care||4.32|
|MITSUI OSK LINES LTD||Industrials||3.88|
Investment Manager's Commentaryas of 30/04/2019
Market Review and Outlook
In tandem with the positive performance of global equity markets, the Topix registered a gain of 1.65% in April. Investors were encouraged by evidence of economic recovery in China coupled with the apparent progress of trade talks between the US and China resulting in rising hopes of a settlement. The oil price strengthened a did the Baltic Freight Index, jumping from 689 to 1011, but currency markets were relatively stable and the Yen showed only marginal weakness. Cyclical stocks led the recovery with shipping, machinery, electronics and autos all rising strongly while utilities, pharmaceuticals and land transport all declined. A feature of the month was a surge in investment from overseas investors with a net inflow of Y1.8trn and looking at the cash market alone an inflow of Y1.6trn and the first cash net buying since July last year.
Domestic economic news announced over the period remained poor, though not unexpectedly so. Following on from the weak Tankan the March Economy Watchers Survey showed a fall of 2.7 to 44.8 for current conditions and the future conditions index slipped 0.3 to 48.6 for the second successive monthly decline. The Consumer Confidence Index also fell in March, falling from 41.5 to 40.5 marking six consecutive falls and reaching the lowest level since Feb’16. Industrial Production fell -0.9% MoM in March somewhat below market expectations of a flat result; on the bright side however a survey of manufacturers production forecasts indicates a strong rebound of +2.7% and +3.6% respectively in April and May. April PMI data was also supportive of potential recovery from recent weakness with a reading of 49.5 up 0.3 compared to the month before.
While global economic conditions remain weak, illustrated by the fact that the IMF cut its 2019 global growth forecast from 3.7% to 3.3% in April, there were further signs that demand appears to be bottoming out in Asia. The March China Manufacturing PMI strengthened further to 50.8 and the composite PMI came in at 54.0 ahead of expectations. Chinese GDP growth in Q1 grew a robust 6.4% YoY and Industrial Production surprised on the upside in March accelerating to +8.5% growth YoY. There remain clear risks to the downside, the most significant of which remains the development of trade relations between the US and China, but we retain our view that a recovery in global demand would have significant implications for the Japanese stock market. The Topix has sharply underperformed over the past six months or so in tandem with the slowdown in global growth and despite ongoing positive domestic developments in terms of improving shareholder returns and a supportive pro-growth political administration. We consider it highly likely that Japan would perform strongly were global economic momentum to recover, reflecting its attractive fundamentals and valuation.
The strong return achieved by the Fund in April is very encouraging. The switch from foreign selling to net inflows is supportive of our expectation that an easing of the heavy selling that marked last year will engender a better environment for bottom-up stock selection based strategies in 2019 while value has underperformed the market so far this year we believe that currently depressed value stocks are likely to outperform the market over the year. A clear trigger for this move would be an improvement in prospects for global growth and recent developments in Asia remain encouraging in this regard. We consider the large number of recent buyback and cross shareholding unwinding announcements a positive development that reflects an ongoing shift in the attitude of Japanese management towards shareholder returns that is very supportive of the market. The Topix is trading at 1.19x book, on an estimated PER of 12.6x and a dividend yield of 2.39%.
The Fund rose 5.65% (I JPY C share class) in April, outperforming Topix which rose by 1.65% (dividends reinvested). The Fund outperformed Topix during the month with stock selection the main driver. Stock selection in transportation, pharmaceuticals, media & entertainment and
materials all made significant positive contributions while the Fund also benefitted from stock selection and being overweight semiconductors & semiconductor equipment. Negative contributions included being overweight real estate as the sector posted losses over the month, while underweights and stock selection in capital goods and telecoms also detracted from performance.
At the stock level positive contributors were dominated by global cyclicals which showed signs of recovery amid a more constructive market outlook and evidence of a value reversal. These included Mitsui OSK, Shin-etsu Chemical, Rohm and Komatsu while the temporary staffing company Persol Holdings also outperformed after recent underperformance left it look very cheap relative to peers. Rakuten continued to outperform on positive news flow around its entry to the domestic mobile market and internet investments while Nintendo jumped in response to an announcement regarding their planned entry to the Chinese console market. The largest negative contributors included Mitsubishi Estate and Mitsui Fudosan as real estate stocks declined as well as Seven & I Holdings and Zozo. Not holding any Softbank also detracted as the stock outperformed ahead of the planned IPO of its investee company Uber.
During the month we initiated a new position in Hitachi High-Tech, switching from the existing long in Screen Holdings as we see the former as a higher quality operation that benefits from a significant medical business in addition to the SPE operations. The ongoing restructuring of the Hitachi Group is also seen as a potential catalyst here. We initiated a position in IHI following a period of sustained share price weakness. Here we like the long term outlook for their aircraft engine operations and we are encouraged by the progress they have made in reducing risk in their engineering contracting business. We sold the remaining position in Fujitsu following it having performed well leaving it showing limited upside. The long position in Nintendo was sold after news of their entry into the Chinese market drove the stock to recent highs and left us with limited upside given what we see as limited potential for consoles in this market and the likely impending peak of the Switch console cycle.
We continued to add to the position in Keisei Electric Railway and Mitsui OSK Lines initiated over the past few months and took advantage of share price weakness to add to positions in Mitsubishi Corp and Seven & I Holdings. After a period of strong performance we took profit on Mitsubishi Estate and Shin-Etsu Chemical reducing the size of these positions.
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 EUR Unhedged Distribution share class
ISIN: LU1870374920 Ticker: AEJLIED LX Launch: 8 Mar 2019
- Articles of Association
- Prospectus - Other languages available upon request
- List of subcustodians
- Audited annual report
- Semi-annual report
- Monthly reports