Strategy
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Japan Research Active Equity

Bottom up research focusing on competitive advantages and corporate reforms.
Investment Philosophy

The investment team believes that significant alpha can be obtained through bottom up research to identify two types of firms:

  1. Those with competitive advantages (including positional and/or capabilities-based advantages) that drive sustained earnings growth
  2. Those undergoing structural changes that can be expected to lead to improvement in earnings momentum

By applying these two perspectives to stock selection, the investment team believes it can consistently deliver stable excess returns over the market.

Bottom up research focusing on competitive advantages and corporate reforms

Companies with competitive advantages are expected to continue to grow their earnings; those implementing corporate reforms are also expected to show earnings growth, resulting in re-ratings. The strategy uses bottom-up research to seek out firms with competitive advantages and structural reform potential.

Key factors and metrics the portfolio manager focuses on include market share, brand name, product innovation, ROE, rationalization of business portfolio and M&A activity.

Experienced portfolio manager supported by robust research platform

Toshinori Kobayashi, the strategy’s lead portfolio manager, possesses broad experience from across a wide range of investment styles. Since becoming a portfolio manager in 1992, he has managed value, growth and small-cap equity investment portfolios across multiple market cycles.

He is supported by Nikko AM’s robust equity research platform. A major competitive advantage of Nikko AM’s is the depth and quality of its proprietary research, which covers companies across a broad range of market capitalisations. In addition to sector analysis, the portfolio managers are supported by style analysts (small/mid cap and value). The different types of analysts bring different perspectives. This combination of perspectives allows Nikko AM to deliver more comprehensive analysis compared to its peers.

Key Characteristics
Bottom up, Fundamental Research
Focus on Competitive Advantages & Corporate Reforms
Experienced Investment Team & Robust Research Platform
Style agnostic, “Best Ideas” Portfolio
Portfolio Construction

The portfolio is constructed through a combination of highly rated stocks from the research universe and the portfolio manager’s own ideas; historically about 80% of the names have analyst “buy” recommendations. The stock selection process identifies a diverse group of companies with high potential for growth and capital appreciation, emphasizing the following two attributes in the context of mid- to long-term industry trends:

Competitive Advantages

  • Positional: Dominant market share, network of relationships, brand name, gatekeeper
  • Capability: Technology, product innovation, marketing, cross-selling

Corporate Reforms

  • Corporate Governance e.g. ROE, shareholder returns
  • Restructuring of Business e.g. rationalization of business portfolio, improvements to productivity
  • Industry Consolidation e.g. M&A activity, business failure of
    underperforming firms

The portfolio comprises two distinct groups of companies which differ in terms of capital efficiency (ROE) and valuation (P/B). Weights are determined according to levels of expected return and the portfolio manager’s conviction.

 

Style agnostic nature of the strategy

The strategy’s portfolio is style agnostic. Its style exposure is controlled, allowing for stock selection across the growth/value spectrum. The strategy is thereby able to generate consistent alpha in different market environments, resulting in an “all-weather” portfolio.

Investment Process
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Lead Portfolio Manager
toshinori-profile
Toshinori Kobayashi
Portfolio Manager

Toshinori Kobayashi has served as team leader and portfolio manager of the Research Active Management team since 2010.

He began his career at Nikko Securities Investment Trust & Management (a predecessor of Nikko AM) in 1988 as a research analyst. He became a portfolio manager in 1992 and was subsequently promoted to team leader of the Market-Oriented Portfolio Management Team in 2003. He holds a B.A. in Law from Chuo University and is a Chartered Member of the Security Analysts Association of Japan (CMA).

Important Information

The funds mentioned are Singapore registered funds approved for sale or purchase in Singapore. By proceeding, you are representing and warranting that you are either resident in Singapore or the applicable laws and regulations of your jurisdiction allow you to access the information.

The information on this website is not intended to be an offer, or a solicitation of an offer, to buy or sell any product or service to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the laws of such jurisdiction.

This website may contain links to the website of certain overseas affiliates of Nikko Asset Management Asia Limited (“Nikko AM Asia”). However, providing such links should not be considered as offering or solicitation by Nikko AM Asia of any product or service of its affiliates to any person.

This website is purely for informational purposes only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. It should not be relied upon as financial advice. The mention of individual securities, sectors, regions or countries within this website are for illustration purposes only and does not imply a recommendation to buy or sell. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in funds are not deposits in, obligations of, or guaranteed or insured by Nikko AM Asia.

Past performance or any prediction, projection or forecast is not indicative of future performance. The Funds or any underlying funds may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the Funds are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus (including the risk warnings) and product highlights sheet of the Funds, which are available and may be obtained from appointed distributors of Nikko AM Asia or our website (www.nikkoam.com.sg) before deciding whether to invest in the Funds.

The information contained herein may not be copied, reproduced or redistributed without the express consent of Nikko AM Asia. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, Nikko AM Asia does not give any warranty or representation, either express or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. Nikko AM Asia accepts no liability for any loss, indirect or consequential damages, arising from any use of or reliance on this website.

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