T. Rowe Price T. Rowe Price Trusty Logo

SICAV

Japanese Equity Fund

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

ISIN LU0230817925 WKN A0MKJ6

3YR Return Annualised
(View Total Returns)

Total Assets
(EUR)

10.53%
€1.5b

1YR Return
(View Total Returns)

Manager Tenure

27.81%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

0.83
5.77%

Inception Date 16-Dec-2005

Performance figures calculated in EUR

Other Literature

31-Dec-2019 - Archibald Ciganer, Portfolio Manager,
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, the outlook for Japan in 2020 is 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.
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.

 

Strategy

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
Annualised
5 YR
Annualised
10 YR
Annualised
Since Manager Inception
Annualised
Fund % 27.81% 10.53% 14.58% 12.27% 13.08%
Indicative Benchmark % 20.98% 6.58% 9.79% 9.64% 9.89%
Excess Return % 6.83% 3.95% 4.79% 2.63% 3.19%

Inception Date 16-Dec-2005

Manager Inception Date 26-Dec-2013

Indicative Benchmark: TOPIX Index Net

Data as of  31-Dec-2019

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
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 16-Jan-2020 Quarter to DateData as of 16-Jan-2020 Year to DateData as of 16-Jan-2020 1 MonthData as of 31-Dec-2019 3 MonthsData as of 31-Dec-2019
Fund % 1.37% 1.37% 1.37% -0.65% 6.83%
Indicative Benchmark % -0.16% -0.16% -0.16% 0.39% 4.85%
Excess Return % 1.53% 1.53% 1.53% -1.04% 1.98%

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.

31-Dec-2019 - Archibald Ciganer, Portfolio Manager,
Japanese equities rose in December but lagged developed markets. Prime Minster Shinzo Abe’s USD $120 billion fiscal stimulus package to offset the fallout from October’s sales tax increase, and to alleviate the impact from declining exports and natural disasters, was welcomed by investors. Within the portfolio, stock selection in electric appliances and precision instruments dragged. For instance, our position in Fanuc, a provider of automation products and services such as robotics, suffered amid ongoing the U.S.-China trade war and falling demand, particularly from China. The weakest performing stock in the portfolio was Pigeon. The baby products manufacturer had a poor third quarter and revised down full-year guidance rather suddenly, leading to sharp drop in the share price. Conversely, stock selection in pharmaceuticals was the greatest area of strength, with Kyowa Kirin and Chugai Pharmaceutical contributing the most. Kyowa Kirin’s shift to in-house products and royalty income has helped improve its gross margin, while Chugai Pharmaceutical was buoyed by sales ahead of expectations for its key Hemlibra drug. The top performing stock in the portfolio was Freee. Shares in the cloud software developer rallied sharply on its initial public offering (IPO).

Holdings

Total
Holdings
75
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 31.14% View Top 10 Holdings Monthly data as of 31-Dec-2019

Largest Top Contributor^

Miura
By 0.08%
% of fund 3.93%

Largest Top Detractor^

Suzuki Motor
By -0.24%
% of fund 2.10%

^Absolute

Quarterly Data as of 31-Dec-2019

Top Purchase

Freee KK (N)
0.77%
Was (30-Sep-2019) 0.00%

Top Sale

Mitsui Fudosan Logistics Park (E)
0.00%
Was (30-Sep-2019) 1.44%

Quarterly Data as of 31-Dec-2019

30-Sep-2019 - Archibald Ciganer, Portfolio Manager,

Sector-level exposures were broadly unchanged-IT and services remains the portfolio's largest overweight, while banks is the biggest underweight. We bought and sold holdings across a number of sectors, notably retail trade, electric appliances and precision instruments, and automobiles and transportation equipment.

IT and Services

We have maintained the broad IT and services as the portfolio's largest overweight, with significant positions in communication names Softbank, Nippon Telegraph & Telecommunications, and NTT Docomo. We are bullish on the industry, specifically the 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 our positioning.

Banks

Banks remain our largest underweight by a significant margin, and we continue to have no holdings in this space. 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 looks very challenging for the foreseeable future.

Retail Trade

The portfolio moved underweight the retail trade sector in the quarter. We sold Zozo, which operates Japan's leading online fashion apparel site, ZOZOTOWN. We have eliminated the name after the partial takeover by Yahoo! Japan and the strong outperformance afterward. The company is likely to become less innovative after the deal, and we believe minority shareholders will eventually be taken out.

We also sold VT Holdings, which operates car dealerships and offers related auto services. The stock is cheap from a valuation perspective, but we are concerned that the name could be a value trap and, given our lower conviction, we chose to sell.

Elsewhere in the sector, we increased our position in Pan Pacific International, Japan's leading discount retailer that operates 651 stores in Japan as of June 2019 and 42 overseas. The stock has sold off on concerns that the Korean diplomatic frictions will negatively affect tourism. However, this created a buying opportunity, and we believe the long-term drivers for the stock will be Chinese inbound tourism and the company taking market share domestically.

Electric Appliances and Precision Instruments

We increased our position in Keyence, which produces vision and laser sensors used in factory automation. It is a high returns business in an industry that is secularly growing, and its domestic business share is very strong, as has been growth outside of Japan. The name has been sold off on concerns about global growth and the outlook for the semiconductor sector, and this sell-off provided an opportunity to add to a very good business that often trades at rich multiples.

Conversely, we sold Renesas Electronics, a designer, developer, manufacturer, and seller of the servicing of semiconductor products, as we grew more concerned about its medium-term growth potential and unattractive valuation.

Automobiles and Transportation Equipment

In the automobiles and transportation equipment sector, we added to our holding in Nippon Seiki, a manufacturer of instrument panels for automobiles, boats, farm tractors, and construction machines. We believe the company should generate strong growth from its auto segment, but its conservative guidance and low payout ratio will hold the stock back in the near term. Longer term, this should improve as it moves to the TOPIX Index and its payout ratio improves.

Elsewhere in the sector, we sold Jamco, which produces interior equipment, such as seats and toilets, for airplanes. This was due primarily to our lower conviction in the stock and the lack of near-term catalysts to drive share price performance.

Pharmaceuticals

In the pharmaceuticals sector, we established a new position in Kyowa Hakko Kirin, which is a domestic Japanese pharmaceutical company with two divisions: pharmaceuticals and biochemicals. We believe Kyowa Hakko Kirin is a transformational product story driven by the regulatory approval of three antibodies. The market is underestimating the operating growth to come from this, providing us with a compelling entry point.

Financials Excluding Banks

In the financials excluding banks sector, Zenkoku Hosho (which translates as "national guarantee") is an independent home mortgage guarantor company in Japan. The company listed its shares in December 2012 and is the only pure play mortgage guarantor listed in Japan. The company has disappointed on taking market share, which was a key thesis for the stock, and the uptake from banks has disappointed-we have sold the stock as a result.

Sectors

Total
Sectors
13
Largest Sector It & Services & Others 34.12% Was (30-Nov-2019) 33.09%
Other View complete Sector Diversification

Monthly Data as of 31-Dec-2019

Indicative Benchmark: TOPIX Index

Top Contributor^

Industrials & Business Services
Net Contribution 1.73%
Sector
-0.05%
Selection 1.78%

Top Detractor^

Communication Services
Net Contribution -0.25%
Sector
0.04%
Selection
-0.29%

^Relative

Quarterly Data as of 31-Dec-2019

Largest Overweight

It & Services & Others
By17.89%
Fund 34.12%
Indicative Benchmark 16.23%

Largest Underweight

Banks
By-5.85%
Fund 0.00%
Indicative Benchmark 5.85%

Monthly Data as of 31-Dec-2019

31-Dec-2019 - Archibald Ciganer, Portfolio Manager,
We increased our already sizeable overweight in the information technology and services sector by participating in the IPO of a medical data aggregator, which engages in the provision of medical database and digital solutions to the health care sector. The company has strong secular tailwinds as it utilises big data and data analysis to help address the problems that stem from Japan’s aging population. We also participated in the IPO of a cloud software developer, capturing sharp share price gains.

Team (As of 06-Jan-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
    since
    2013
  • Years at
    T. Rowe Price
    12
  • Years investment
    experience
    20
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
    11
  • Years investment
    experience
    20

Fee Schedule

Share Class Minimum Initial Investment and Holding Amount Minimum Subsequent Investment Minimum Redemption Amount 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.

Dismiss
Tap to dismiss

Download

Latest Date Range
Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Continue with sign in?
To complete sign in and be redirected to your registered country, please select continue. Select cancel to remain on the current site.
Continue Cancel
Once registered, you'll be able to start subscribing.

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

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

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest