SICAV

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
(EUR)

11.85%
€1.9b

1YR Return
(View Total Returns)

Manager Tenure

19.73%
6yrs

Information Ratio
(5 Years)

Tracking Error
(5 Years)

1.20
6.52%

Inception Date 16-Dec-2005

Performance figures calculated in EUR

Other Literature

31-Jan-2020 - Archibald Ciganer, Portfolio Manager,
Following strong gains for Japanese equities in 2019, we believe the outlook for the market remains robust. While the domestic growth backdrop appears sluggish, easing trade tensions between the U.S. and China, marked by the signing of a partial trade deal in December, should benefit Japan’s open economy amid a gradual recovery in foreign demand. Two key factors—the 5G technology cycle and the upcoming Tokyo Olympics—are providing strong support for investor sentiment.
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 % 19.73% 11.85% 14.30% 12.61% 13.44%
Indicative Benchmark % -0.52% 3.49% 6.50% 8.14% 7.91%
Excess Return % 20.25% 8.36% 7.80% 4.47% 5.53%

Inception Date 16-Dec-2005

Manager Inception Date 26-Dec-2013

Indicative Benchmark: TOPIX Index Net

Data as of  30-Sep-2020

Performance figures calculated in EUR

  1 YR 3 YR
Annualised
5 YR
Annualised
10 YR
Annualised
Fund % 19.73% 11.85% 14.30% 12.61%
Indicative Benchmark % -0.52% 3.49% 6.50% 8.14%
Excess Return % 20.25% 8.36% 7.80% 4.47%

Inception Date 16-Dec-2005

Indicative Benchmark: TOPIX Index Net

Data as of  30-Sep-2020

Performance figures calculated in EUR

Recent Performance

  Month to DateData as of 23-Oct-2020 Quarter to DateData as of 23-Oct-2020 Year to DateData as of 23-Oct-2020 1 MonthData as of 30-Sep-2020 3 MonthsData as of 30-Sep-2020
Fund % 0.91% 0.91% 13.09% 8.07% 9.59%
Indicative Benchmark % -0.27% -0.27% -5.38% 3.68% 2.84%
Excess Return % 1.18% 1.18% 18.47% 4.39% 6.75%

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.

Index 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.

30-Sep-2020 - Archibald Ciganer, Portfolio Manager,
Japanese equities rose in September, outperforming their developed market peers. The performance of Japanese growth stocks was well ahead of their value peers. Within the portfolio, our stock picks in the information technology and services sector contributed the most to relative returns. Accounting software company freee was the top-contributing holding. Its shares rallied on increases in the number of user firms and continued market share gains. Elsewhere in the sector, our overweight holding in UT Group, a provider of temporary staffing services for Japanese manufacturers, added further value. The firm has been a beneficiary of increased semiconductor- and electronic components-related staffing demand and a recovery in domestic automobile production. Conversely, our avoidance of NTT DoCoMo, the mobile subsidiary of Nippon Telegraph and Telephone, had the most negative impact on the portfolio. The shares rallied sharply after Nippon Telegraph and Telephone announced plans to turn NTT DoCoMo into a wholly owned subsidiary (it already owns about 66% of the mobile carrier). The restructuring is expected to enable NTT DoCoMo to offer cheaper rates in competition with rivals.

Holdings

Total
Holdings
57
Largest Holding SOFTBANK GROUP CORP 6.00% Was (30-Jun-2020) 5.59%
Other View Full Holdings Quarterly data as of 30-Sep-2020
Top 10 Holdings 38.90% View Top 10 Holdings Monthly data as of 30-Sep-2020

Largest Top Contributor^

SOFTBANK GROUP CORP
By 1.13%
% of fund 5.95%

Largest Top Detractor^

Hoshizaki
By -1.84%
% of fund 4.60%

^Absolute

Quarterly Data as of 30-Sep-2020

Top Purchase

Freee KK
2.61%
Was (30-Jun-2020) 1.56%

Top Sale

Nippon Telegraph & Telephone
2.75%
Was (30-Jun-2020) 3.60%

Quarterly Data as of 30-Sep-2020

30-Jun-2020 - Archibald Ciganer, Portfolio Manager,

The disparity in performance between quality defensive companies and cyclicals has been extreme. In light of these differences, we have worked hard to identify quality cyclical companies that stand to outperform as earnings expectations improve from depressed levels. We have taken the decision to increase the portfolio's turnover as we look to take advantage of these performance disparities.

Electric Appliances and Precision Instruments

We added to our cyclical exposure, particularly in the factory automation space; sentiment is depressed in this area at the moment, but we believe the demand for factory automation will be expedited by the pandemic. We increased our holding in automation solutions company FANUC. The company has highly automated and vertically integrated production facilities in Japan and a 50% share in computer control systems used extensively in the automotive industry. While FANUC's near-term earnings outlook has been negatively affected by the coronavirus, we believe the outlook over the long term remains positive.

We also increased our position in industrial company Mitsubishi Electric. While its near-term earnings will be affected by the coronavirus pandemic and associated lockdowns, the company is focused on automating factory production, a trend that we believe will be expedited by the current crisis.

Machinery

We also increased our machinery exposure. Hoshizaki is a commercial kitchen manufacturer with a large domestic presence but also the potential to grow overseas. The coronavirus pandemic has adversely affected the company's earnings and growth prospects in 2020. However, we believe earnings will recover sharply from here as companies look to automate and improve kitchen services in response to the pandemic.

IT and Services

We reduced our overweight exposure to IT and services, although it remains the portfolio's largest sector allocation on an absolute basis. We sold our holding in NTT DoCoMo, the largest mobile carrier in Japan. It is a relatively defensive stock at this point in the recovery from the coronavirus crisis, and our preference is for other companies in the sector, which we added exposure to as a result of this sale.

Pharmaceutical

We locked in some profits in Chugai Pharmaceutical and Takeda Pharmaceutical after the sector rallied amid the global coronavirus pandemic. We are looking to add to more cyclical names that have sold off sharply recently.

Sectors

Total
Sectors
12
Largest Sector It & Services & Others 37.57% Was (31-Aug-2020) 37.49%
Other View complete Sector Diversification

Monthly Data as of 30-Sep-2020

Indicative Benchmark: TOPIX Index

Top Contributor^

Information Technology
Net Contribution 1.96%
Sector
0.04%
Selection 1.92%

Top Detractor^

Communication Services
Net Contribution -0.31%
Sector
0.20%
Selection
-0.51%

^Relative

Quarterly Data as of 30-Sep-2020

Largest Overweight

It & Services & Others
By18.88%
Fund 37.57%
Indicative Benchmark 18.70%

Largest Underweight

Banks
By-4.73%
Fund 0.00%
Indicative Benchmark 4.73%

Monthly Data as of 30-Sep-2020

30-Sep-2020 - Archibald Ciganer, Portfolio Manager,
Banks remains a sizeable sector underweight and we have no holdings in this space; competition among banks is rife, which 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 to gain market share.

Team (As of 01-Oct-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 1999 and he has been with T. Rowe Price since 2007, beginning in the International Equity group. Archibald began his career as a credit analyst with BNP Paribas in Japan. Subsequently, he served as an associate in the firm'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 (sciences po.). Archibald has also earned the Chartered Financial Analyst® designation.

  • Fund manager
    since
    2013
  • Years at
    T. Rowe Price
    13
  • Years investment
    experience
    21
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 (EUR) Minimum Subsequent Investment (EUR) Minimum Redemption Amount (EUR) Sales Charge (up to) Investment Management Fee (up to) Ongoing Charges
Class A €1,000 €100 €100 5.00% 160 basis points 1.71%
Class I €2,500,000 €100,000 €0 0.00% 75 basis points 0.81%
Class Q €1,000 €100 €100 0.00% 75 basis points 0.86%

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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