One year after launch, the RWC Nissay Japan Focus Fund has delivered significant outperformance versus the index generating +7.2 per cent for its investors versus the TOPIX’s decline of -11.7 per cent, making it the third best performing fund out of 265 within the Lipper Japan UCITS peer group.
The fund is an actively managed portfolio of Japanese equities with a strong focus on active engagement with those companies. Through positive and constructive shareholder engagement, the team aims to help boards unlock value and so generate alpha within the fund.
Management teams in Japan are seeing increased scrutiny on their corporate governance approach by both local and international investors. A Constructive Engagement approach has been the team's key focus for over a decade. To see governance structures and market pressures beginning to work as they should in Japan is an important development.
Portfolio Manager, Yasuaki Kinoshita (pictured), says: “For investors in Japan with a bottom-up, stock picking approach, keeping an eye on macro-economic turbulence will be vital. However, finding good opportunities by working with managements and boards for change offers ever more scope for returns. Corporate governance has been one clear area of Abenomics’ success.”
Senior Portfolio Advisor, Corinna Arnold, says: “Last year listed Japanese companies issued their first corporate governance reports, and there is ongoing cause for optimism here. Such reporting provides a new metric for identifying companies that genuinely understand the need to create and sustain shareholder value. This is a signpost of the shift in corporate Japan: For the first time almost everyone knows what shareholder value entails, even if a smaller percentage, for now, are moving to realise it.”
The RWC Nissay Japan Focus Fund is a Luxembourg SICAV launched a year ago to answer investor demand for a concentrated equity fund that can take advantage of the evolving Japanese corporate landscape. It closely replicates the team’s existing Dublin-domiciled Japanese Stewardship Fund which has outperformed the TOPIX by over 50 per cent since inception in 2005. 2
James Tollemache, Head of Sales at RWC Partners, says: “The RWC Nissay Japan Focus Fund is unusual given its concentrated nature and focus on creating shareholder value through corporate engagement. We are not looking to become the largest Japanese equity fund, but after one year investors have shown their support. To be able to repay that valued backing by delivering a sizeable positive return in an otherwise negative Japanese equity market is a great outcome.”
