This strategy aims to deliver a return that is higher than its benchmark, the Russell/Nomura Mid-Small Cap Index over any five-year period.
As bottom-up investors, stock selection permeates everything we do. Rather than trying to forecast future returns, we focus on understanding what the current stock price is telling us about how the market currently values that business and the risks that are or are not priced in.
In identifying investment candidates, we seek to be long-term shareholders as opposed to traders of the stock. This requires a deep bottom-up knowledge of the company, it’s management, their capital allocation policies and strategic initiatives, linkages up and down the supply chain and end market for its products, peer companies and competitive positioning. The strength and experience of our analyst team, organised as industry and sector specialists enables us to capitalise on investment opportunities as they arise.
Valuation is central to our process, however, we do not believe in traditional ‘value’ or ‘growth’ labels and invest in growth stories as long as they can be purchased at a disciplined risk/reward outlook.
In portfolio construction, we acknowledge our relative deviation from the benchmark in that we consider stocks we do not own to be active portfolio management decisions as well as stocks we do own.
The strategy typically holds fewer than 50 companies. At least 80% of its holdings are domiciled, or conduct the majority of their business activity, in Japan.