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Japanese giant unveils small-cap value fund for European investors

Japanese giant unveils small-cap value fund for European investors

Japanese asset management giant Daiwa SB Investments has launched its top performing Japan Equity Small Cap Absolute Value fund into the UK and Europe.

The Luxembourg-domiciled fund has returned 19.17% annualised over three years to January 2017 compared with the peer group average of 12.55%.

Daiwa SBI said it will cap the $675 million (£555 million) strategy at around $1 billion.

It has an annual management fee of 0.8% for institutional clients and 1.2% for retail investors.

Japanese small caps account for approximately two thirds of the Japanese equity market.

Managed by lead portfolio manager Tatsuro Nigauri, the fund offers investors access to his approach which targets companies with sustainable mid to long-term earnings growth that are often under-researched by analysts and overlooked by investors.

Nigauri then works out a ‘fair price’ for each stock in the portfolio on a three to five year view by estimating an appropriate price-to-earnings ratio, taking into account the company’s growth potential.

The fund manager takes a long-term view and waits for the market to realise the intrinsic value of the stocks held in the portfolio, which typically holds between 100 and 150 stocks.

Nigauri said: ‘We expect Japanese small caps to continue to outperform large caps over the medium to long-term. These domestically-focused businesses are less affected by foreign exchange rates and economic developments in other countries.’

Daiwa SB Investments is working with fund distribution consultancy Harrington Cooper to promote its fund range in the UK market.

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