Sumitomo Mitsui Trust Asset Management (SuMi TRUST), one of Asia’s largest asset management groups with over USD760 billion AUM, is this month marking the three year anniversary of its Sakigake High Alpha — Japan Thematic Growth fund, which launched in June 2018 and has over USD42 million assets under management (AUM).
Since inception the fund has outperformed its TOPIX benchmark index by +10.44 per cent on a cumulative basis, returning 29.72 per cent against the TOPIX’s 19.28 per cent.
Sakigake is the Japanese term for pioneer or ‘people ahead of the curve.’ The fund is aimed at institutional investors in EMEA and Asia and invests in handpicked mid and large-cap Japanese stocks seeking long-term capital growth. It combines a thematic top-down investment style, focusing on a number of global social and structural changes such as the move towards digitalisation, the rise of e-commerce and increasing awareness of ESG, with a bottom-up fundamental research approach to stock selection.
Compared to its benchmark index, the fund has a higher weighting in the information technology and industrial sectors where SuMi TRUST sees opportunities in the semiconductor, electronic and 5G spaces due to the global shift towards automation and digitisation.
Among the fund’s top holdings are Tokyo Electron Limited, a leading semiconductor production equipment manufacturer; Keyence Corporation, which develops and manufactures automation sensors, such as vision systems and barcode readers and Kawasaki Heavy Industries, a leading manufacturer with cutting edge technology in the field of hydrogen energy.
Katsunori Ogawa, a veteran portfolio manager with over 20 years’ experience in Japanese equities, has been responsible for the overall Japan Sakigake strategy since its inception in 2003. During this time the strategy has delivered an excess return of 218.05 per cent above the TOPIX and has over USD 2 billion assets under management (AUM).
Ogawa says: “Japan is a market where it pays to invest in active management. The country plays host to a great number of strong innovative companies with excellent growth prospects but it also has more listed companies relative to the size of its economy that Europe or the US. With limited analyst coverage of the market and a wide pool of stocks, relying on passive tracker funds means missing significant opportunities.
“There are a number of promising Japanese mid and large caps that are set to benefit from certain structural tailwinds in the country, including the government’s digitisation drive and the ongoing shift to ecommerce. The nation also has a number of unique, specialised technology companies, which fulfil vital roles in the global semiconductor and electronic supply chains, which are becoming increasingly important especially given recent shortages. Our investment strategy, which has proven highly successful since inception, is to seek out quality companies ahead of the curve that are best able to take advantage of these trends and generate consistent medium to long-term growth using a unique combination of thematic top-down and bottom-up approaches. As more and more investors flock to Japan to seek alpha opportunities, we will continue in our quest to find the most attractive companies that are able to achieve strong returns over the long-term.”
