The Japanese equity market remains deeply unloved, according to Akira Yoshimi, fund manager of the Melchior Selected Trust: Japan Advantage Fund (MSTJAF), a Japanese equity fund.
After two years of falling share prices, Yoshimi considers the Japanese stock market cheap, both compared with other equity markets and also compared with historic Japanese equity valuations.
“The Japanese stock market is currently trading on a forward Price/Earnings ratio of 13x which is the lowest level for over 30 years. Relative to other markets, Japanese equities also look cheap having under-performed almost all other markets over the last two years,” says Yoshimi.
His fund, the MSTJAF, has outperformed the Topix index by 4.5% per annum since launch in June 2006 by investing in larger cap stocks which typically have low price earnings ratios, good fundamentals and reasonable earnings growth prospects.
Stock selection and position sizing are key to the strong performance record and are determined by a combination of quantitative screening, fundamental analysis and conviction. Using this approach Yoshimi has succeeded in constructing a portfolio with a relatively low risk profile but with high alpha potential.
Yoshimi has used this investment approach for 14 years and achieved returns of 153.9% in yen terms from February 1994 to November 2004 compared with a return of 23.8% of the Topix index. Over this eleven year period, Yoshimi out-performed the benchmark in each year.
“We believe the MSTJAF is a core holding for anyone looking to obtain exposure to the Japanese equity market. Akira Yoshimi is one of Japans outstanding and most respected fund managers. He carries with him an exceptional track record and a strong following among Japanese institutional investors who have been benefiting from his stock picking skills since 1994,” says Magnus Spence, partner, MSTJAF.