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Japanese Equity Fund

Seeking to uncover the best investment opportunities across the Japanese equity spectrum.

ISIN LU0230817925 Bloomberg TRPJAEI:LX

3YR Return Annualised
(View Total Returns)

Total Assets


1YR Return
(View Total Returns)

Manager Tenure


Information Ratio
(5 Years)

Tracking Error
(5 Years)


Inception Date 16-Dec-2005

Performance figures calculated in EUR

Other Literature

29-Feb-2020 - Archibald Ciganer, Portfolio Manager,
We believe the impact on Japanese equities from the coronavirus will be relatively short lived. A negative effect on the tourism sector is likely inevitable, but when it comes to markets, share prices have already fallen sharply to reflect the bad news. Companies with sizeable exposure to China have been particularly weak—this could provide us with an opportunity to add to companies we consider worthy of investing in for the long term at attractive valuations.
Archibald Ciganer
Archibald Ciganer, Portfolio Manager

Archibald Ciganer is the portfolio manager of the Japan Equity Strategy in the International Equity Division. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price Japan, Inc.

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Manager's Outlook

In November, Shinzo Abe became Japan's longest-serving prime minister. Seven years ago, Abe assumed leadership of a country burdened by stagnant economic growth, unfavorable population dynamics, and a mountain of debt. He adopted a "three arrows" approach (Abenomics) to counter these trends, centered around loose monetary policy, fiscal stimulus, and structural reform.

On the first arrow, Japan has certainly managed to leave behind a deeply entrenched deflationary cycle, although inflation is falling short of the BoJ's 2% target. This has been achieved in part by monetary expansion through massive bond and equity purchases - quantitative easing - and the BoJ has said that it will not hesitate to add further stimulus if needed.

Regarding fiscal stimulus, the second arrow, Japan first hiked consumption taxes five years ago - to 8% from 5% - and followed this with a further increase to 10% in October 2019. In the first instance, the post-increase slump in spending dragged the Japanese economy into recession. However, there are few signs of consumers behaving the same way as they did when the tax previously went up, and the government has excluded items such as fresh food to smooth the impact, as well as introducing alleviation measures for automobiles and housing.

The third arrow of structural reform has contributed to an increase in female participation in the workforce and encouraged businesses to allocate capital more effectively. The productivity of capital has risen, albeit from a low base. Against this backdrop of change, an increasing number of Japanese companies are defying skeptics by transforming business practices and governance standards. We believe this can help corporate profit growth and generate improving shareholder returns. The volume of shareholder buybacks is increasing while merger and acquisition activity also shows promise.

The condition of the global economy remains a key factor supporting the Japanese equity market. An environment of modest global growth should continue to help corporate Japan perform well. Japan is an open and cyclical economy; therefore, central bank easing and the resolution in the U.S.-China trade war will be supportive for Japan.

Despite the strong performance in 2019, we believe the outlook for Japan in 2020 remains robust. The 5G technology cycle and the upcoming Olympics are providing strong support for sentiment and fundamentals for earnings, the economy, and the equity market.

Investment Objective

To increase the value of its shares, over the long term, through growth in the value of its investments. The fund invests mainly in a widely diversified portfolio of stocks of companies in Japan.

Investment Approach

  • Macroeconomic factors have a role, but our approach is primarily bottom-up and research driven.
  • Growth opportunities are found across the capitalization spectrum and across market sectors.
  • Risk is managed at stock, sector, and cap-range levels.
  • Portfolio rebalancing is an effective risk management tool.

Portfolio Construction

  • Typically 80-110 stock portfolio
  • Minimum individual position size is 0.40%
  • Individual position sizes can range +/- 2.00% relative to the benchmark
  • Sector weightings vary from +/- 10% of the benchmark
  • Tracking error expected to range between 300 and 600 bps
  • Target reserves less than 5%

Performance (Class I)

Annualised Performance

  1 YR 3 YR
5 YR
10 YR
Since Manager Inception
Fund % 6.04% 4.88% 8.61% 10.29% 10.86%
Indicative Benchmark % 2.69% 1.50% 4.24% 7.65% 7.85%
Excess Return % 3.35% 3.38% 4.37% 2.64% 3.01%

Inception Date 16-Dec-2005

Manager Inception Date 26-Dec-2013

Indicative Benchmark: TOPIX Index Net

Data as of  29-Feb-2020

  1 YR 3 YR
5 YR
10 YR
Fund % 27.81% 10.53% 14.58% 12.27%
Indicative Benchmark % 20.98% 6.58% 9.79% 9.64%
Excess Return % 6.83% 3.95% 4.79% 2.63%

Inception Date 16-Dec-2005

Indicative Benchmark: TOPIX Index Net

Data as of  31-Dec-2019

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 27-Mar-2020 Quarter to DateData as of 27-Mar-2020 Year to DateData as of 27-Mar-2020 1 MonthData as of 29-Feb-2020 3 MonthsData as of 29-Feb-2020
Fund % -3.18% -12.61% -12.61% -9.09% -10.33%
Indicative Benchmark % -4.31% -13.50% -13.50% -9.05% -9.25%
Excess Return % 1.13% 0.89% 0.89% -0.04% -1.08%

Inception Date 16-Dec-2005

Indicative Benchmark: TOPIX Index Net

Indicative Benchmark: TOPIX Index Net

Performance figures calculated in EUR

Past performance is not a reliable indicator of future performance.  Source for fund performance: T. Rowe Price. Fund performance is calculated using the official NAV with dividends reinvested, if any. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. It will be affected by changes in the exchange rate between the base currency of the fund and the subscription currency, if different. Sales charges (up to a maximum of 5% for the A Class), taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures. 

Where the base currency of the fund differs from the share class currency, exchange rate movements may affect returns.

Returns shown with reinvestment of dividends after the deduction of withholding taxes. 

Effective 1 June 2019, the "net" version of the indicative benchmark replaced the "gross" version of the indicative benchmark. The "net" version of the indicative benchmark assumes the reinvestment of dividends after the deduction of withholding taxes applicable to the country where the dividend is paid; as such, the returns of the new benchmark are more representative of the returns experienced by investors in foreign issuers. Historical benchmark performance has been restated accordingly.

29-Feb-2020 - Archibald Ciganer, Portfolio Manager,
Japanese equities suffered sharp losses in February, marginally underperforming their developed counterparts. Market turmoil was brought about by growing concerns about the economic impact of the coronavirus. In the portfolio, Chugai Pharmaceutical was among the top contributors. Its shares rallied on the pharmaceutical company’s 2019 earnings release, where management’s forecasts for the 2020 fiscal year indicated stronger-than-expected royalty income from its Hemlibra haemophilia drug. Daio Paper also generated a strong return within the raw materials and chemicals sector. The paper and pulp company saw a marked year-on-year increase in operating profit due to product price revisions, lower-than-expected raw material and fuel prices, and an increase in the use and collection of tough-to-treat wastepaper. In contrast SMS, a leader in recruitment services and classified media for nurses and workers in the elderly care market, had the most negative impact on performance. Its shares fell sharply after the company released third-quarter results, which showed a slowdown in its careers business, especially for nursing care. SMS asserted that the issue was short term and not a result of competitive pressures.


Largest Holding Miura 3.91% Was (30-Sep-2019) 3.46%
Other View Full Holdings Quarterly data as of 31-Dec-2019
Top 10 Holdings 34.24% View Top 10 Holdings Monthly data as of 29-Feb-2020

Largest Top Contributor^

By 0.08%
% of fund 3.93%

Largest Top Detractor^

Suzuki Motor
By -0.24%
% of fund 2.10%


Quarterly Data as of 31-Dec-2019

Top Purchase

Freee KK (N)
Was (30-Sep-2019) 0.00%

Top Sale

Mitsui Fudosan Logistics Park (E)
Was (30-Sep-2019) 1.44%

Quarterly Data as of 31-Dec-2019

31-Dec-2019 - Archibald Ciganer, Portfolio Manager,

We are finding opportunities in the broad IT and services sector. There is scope for improving earnings, while valuations also look attractive. Elsewhere within the sector, we remain overweight staffing agencies. Signs of a tightening labor market are a key positive for the industry and one of the key themes in the portfolio's current positioning. Holdings include UT Group and Recruit Holdings.

We continue to avoid the banking sector. Intense competition in the sector means that there is an almost unlimited supply of loans at very low rates. Demand is improving for these loans, but they are being offered at the rate of Japanese government bonds in some instances. Net interest margin compression is easing, but the benefits from this are being given up as banks try and gain market share. Furthermore, with the introduction of negative interest rates on excess holdings and with speculation that this could increase further, the outlook is challenging for the foreseeable future.

IT and Services

We added exposure to the IT and services sector, the portfolio's largest overweight. This was achieved through participation in two initial public offerings (IPOs): JMDC and Freee. JMDC is a medical data aggregator that engages in the provision of medical database and digital solutions to the healthcare sector. The company has strong secular tailwinds as it utilizes big data and data analysis to support Japan's aging population. Meanwhile, Freee is a software startup that offers a cloud-based accounting platform serving over one million small- to medium-sized enterprises.

Elsewhere in the sector, we increased our holding in Nippon Telegraph & Telephone (NTT), Japan's leading telecommunications company with dominant market share in both the fixed line and wireless segments. We believe the company has an above-average business model in an industry with high barriers to entry and enjoys modest structural growth and decent returns. Furthermore, NTT is focused on investor-friendly business transformation and has the potential to improve cost, asset, and capital efficiency.

We also added to our position in Sansan, a leading provider of business card management to Japanese corporates, with 80% market share. The company is the country's version of professional networking site LinkedIn. It is a multi-year growth compounder in the business card management market, a business unique to Japan where people exchange cards very frequently. Sansan charges JPY1,000 per month per employee on average and helps digitize business cards, which allows for time savings in searching for cards, and lets corporates integrate employees' networks into corporate assets.

In contrast, we trimmed our position in GMO Payment Gateway, one of Japan's largest payment processing companies, and the country's equivalent of PayPal. The stock has performed very well, and we continue to believe the company enjoys structural tailwinds as Japan demonetizes. However, SoftBank has entered a strategic partnership with Wirecard and competition is therefore likely to increase, prompting us to take profits.

Real Estate

We switched some of our exposures in real estate, moving underweight the sector. We sold Mitsui Fudosan Logistics, a REIT that invests mainly in modern logistics facilities in Tokyo. Our investment thesis was predicated on defensive income gains and dividend per share growth, and this played out following very strong performance. We also eliminated our holding in Mori Hills REIT, with a view to taking profits.

Our preferred stock in the sector is Industrial & Infrastructure Fund Investment, a REIT that is sponsored by Mitsubishi Corporation and UBS. It invests in infrastructure assets, factories and research and development centers. Our investment thesis is that the company's defensive assets will allow solid dividend growth potential, as the yield on those assets exceeds capitalization rates in Japan.

Retail Trade

We shifted to a more underweight stance in the retail trade sector. We sold our position in Seria, one of Japan's biggest operators of JPY100 (discount) stores. Having invested in the company for its superior inventory management, which allowed it to generate higher margins than peers, competitive pressures have become rife and show no signs of easing, leading us to eliminate the position.

Elsewhere, we trimmed Welcia, one of Japan's largest drugstore chains with over 1,970 stores as of August 2019. The stock has outperformed as the company continues to gain market share, with best-in-class store sales volumes. However, following strong results and share price performance, the valuation has become rich and the stock has become a consensus trade, prompting us to take some profits and reduce our position.


Largest Sector It & Services & Others 34.94% Was (31-Jan-2020) 33.71%
Other View complete Sector Diversification

Monthly Data as of 29-Feb-2020

Indicative Benchmark: TOPIX Index

Top Contributor^

Industrials & Business Services
Net Contribution 1.73%
Selection 1.78%

Top Detractor^

Communication Services
Net Contribution -0.25%


Quarterly Data as of 31-Dec-2019

Largest Overweight

It & Services & Others
Fund 34.94%
Indicative Benchmark 16.56%

Largest Underweight

Fund 0.00%
Indicative Benchmark 5.75%

Monthly Data as of 29-Feb-2020

29-Feb-2020 - Archibald Ciganer, Portfolio Manager,
We increased our overweight in the information technology and services sector. Here, we established a position in a network products and services company which has a top share in Cisco products in the Japanese market. We expect the company to expand margins in the network infrastructure space. Our view is that it is professionally managed with long-term, focused strategies, strong execution, and a stable shareholder return policy. We also increased our holding in a large payment processing company, Japan's equivalent of PayPal. The stock enjoys structural tailwinds as the country demonetises.

Team (As of 27-Mar-2020)

Archibald Ciganer

Archibald Ciganer is the portfolio manager of the Japan Equity Strategy in the International Equity Division. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price Japan, Inc.

Archibald’s investment experience began in 2000, and he has been with T. Rowe Price since 2007, beginning in the International Equity groupDivision. Archibald began his career as a credit analyst with BNP Paribas in Japan. Subsequently, he served as an associate in the firm'sBNP’s Investment Banking Department and, most recently, as a vice president in Mergers and Acquisitions, where he handled a number of cross-border transactions for blue chip Japanese and foreign corporates.

Archibald earned a B.A. in finance and accounting from Institut d'Etudes Politiques de Paris (sSciences pPo.). Archibald He also has also earned the Chartered Financial Analyst® designation.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

  • Fund manager
  • Years at
    T. Rowe Price
  • Years investment
Laurence Taylor

Laurence Taylor is a portfolio specialist in the Equity Division at T. Rowe Price, representing the firm's global equity strategies to institutional clients, consultants and prospects. Mr. Taylor is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.

Mr. Taylor has 19 years of investment experience, 10 of which have been with T. Rowe Price. Prior to joining the firm in 2008, Mr. Taylor was a quantitative portfolio manager at AXA Rosenberg, with responsibility for European institutional clients, and began his career at Hewitt Associates in the UK investment practice. At Hewitt, Mr. Taylor provided investment advice to European institutions as a client-facing consultant before specializing in the research and selection of global and regional equity managers in the manager research team.

Mr. Taylor obtained his B.A., with honours, from Greenwich University and has earned the Chartered Financial Analyst designation.

  • Years at
    T. Rowe Price
  • Years investment

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount (EUR) Minimum Subsequent Investment (EUR) Minimum Redemption Amount (EUR) Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A €15,000 €100 €100 5.00% 160 basis points 1.77%
Class I €2,500,000 €100,000 €0 0.00% 75 basis points 0.85%
Class Q €15,000 €100 €100 0.00% 75 basis points 0.92%

Please note that the Ongoing Charges figure is inclusive of the Investment Management Fee and is charged per annum.

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GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®). TRP has been independently verified for the twenty one- year period ended June 30, 2017 by KPMG LLP. The verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm's policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request

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