Transcript of the recording:
Hideo is a man of great wisdom and great experience, and the first thing I would like to ask you to do is with your wisdom and experience, would you please just talk us through your philosophy and your unique approach to managing Japanese equities, which is something quite different from any other offer in the market today.
What the Fund Represents
We are long-term, growth-oriented investor with a low turnover, high conviction and concentrated portfolio with top ten holdings usually accounting for a half of the portfolio. We are not small, mid-cap investors. If the growth is in large-cap stocks, that’s where we go. But our portfolio is always geared toward growth-oriented stocks. As a long-term growth investor, we do not invest in economic sensitives, cyclical, nor export-oriented manufacturing companies which business fluctuate widely. Market characteristics change from time to time, but we stand firm in our conviction no matter what the market or other investing experts have to say.
With my more than 50 years of experience as a portfolio manager, I have learnt that long-term performance can be achieved by concentrating a portfolio on companies in which I have a high confidence and holding on them even when market sentiment is against us. It takes great patience and strong discipline to follow this strategy consistently, but patience could lead to good investment returns.
“I have learnt that long-term performance can be achieved by concentrating a portfolio on companies in which I have a high confidence and holding on them even when market sentiment is against us.”
Japan’s Changing Economy
Over the past 30 years since the collapse of the bubble economy in 1990, the Japanese economy has been stagnant with nil improvement in labour productivity and nil increase in wages. We believe that the Japanese economy can only become revitalised through successful changes in its economic and social structure, which will increase labour productivity. Our investment philosophy has been grounded in the search for companies that can exploit and benefit from Japan’s long-term change to its economic and social structure, i.e. companies that can benefit from the changing “New Japan” that is facing with an aging and declining population, changing consumers’ lifestyles and its economy becoming service and internet-oriented.
We are always focused on the future of Japan and concentrate on areas being transformed for the long-term by several megatrends impacting the Japanese economy. We have never diverted from our investment philosophy. Our portfolio is invested with the three major long-term secular growth themes: first, digitalization and internet-related, including e-commerce and various kind of companies who operate their business on websites; second, medical and healthcare which are regarded as one of Japan’s last remaining growth industries; and third, companies that are finding growth opportunities amid an aging and declining population.
“We are always focused on the future of Japan and concentrate on areas being transformed for the long-term by several megatrends impacting the Japanese economy.”