M&G Japan

M&G Japan invests in Japanese firms of any size. The team concentrates its efforts on really getting under the skin of the businesses it looks at, which adds value in an esoteric market like Japan, and leads to a concentrated portfolio of companies of which they have a real in-depth understanding. The fund is concentrated, with typically fewer than 50 holdings, which are invested over all market caps, although the fund is overweight small and mid-caps.

AlphaQuest data Fund provider factsheet
Print this note / Save to PDF

Quick Access

Our Opinion
Fund Manager
Key Facts
Fund Performance
Risk
Company Description
Investment process
ESG

Our Opinion

Carl is passionate and extremely knowledgeable about the Japanese market. He really understands the businesses in which he invests and their drivers, undertaking a great deal of in-depth research. This is combined with a strong understanding of the Japanese culture, which is key to successful investing there. His passion for the stocks in which he invests is tempered by having a close eye on risk and analysing the risk/reward with each investment. The fund has a slight value bias and has consistently outperformed under Carl’s tenure.

Fund Manager

Expand

Fund Manager

Close

Carl Vine joined M&G in 2019 as Co-Head of the Asia Pacific Equity Team, bringing 25 years of investment experience in Japan. He manages M&G’s Japanese Equities strategies and previously co-founded Port Meadow Capital Management in 2014. Carl has held senior roles as Managing Director and Portfolio Manager at SAC Capital Advisors in Hong Kong and as a Managing Director at UBS in Hong Kong, focusing on Asia, including Japan. He began his career with Prudential Portfolio Managers in London and opened Prudential’s Japan office. Carl holds a Bachelor of Arts (Hons) in Politics, Philosophy & Economics from Oxford University.

Carl Vine joined M&G in 2019 as Co-Head of the Asia Pacific Equity Team, bringing 25 years of investment experience in Japan. He manages M&G’s Japanese Equities strategies and previously co-founded Port Meadow Capital Management in 2014. Carl has held senior roles as Managing Director and Portfolio Manager at SAC Capital Advisors in Hong Kong and as a Managing Director at UBS in Hong Kong, focusing on Asia, including Japan. He began his career with Prudential Portfolio Managers in London and opened Prudential’s Japan office. Carl holds a Bachelor of Arts (Hons) in Politics, Philosophy & Economics from Oxford University.

Read More

Key Facts

Asset type Equity

Annual Income (Historic) -

Sector Japan

Gearing-

Fund Size-

Fund Manager Start Date 20 September 2019

Ongoing Charges Figure (OCF) -

Payment Date(s) Sep

Annual Management Charge (AMC) -

Fund Performance

Expand

Risk

Managing risk is integral to the investment approach, with the team maintaining a constant balance between stock picking and risk navigation. Stock-specific risk is expected to account for most of the fund’s risk. The team monitors correlations among portfolio holdings and among key underweights to stay on top of diversification levels.

A separate risk team provides ongoing analysis to assess the fund’s behaviour in various market scenarios and challenge decisions. However, it is the fund managers who are ultimately responsible for the risk management of the fund. The managers recognise that bottom-up portfolios often result in sector biases, so they will limit a position if they feel that the sector bet is outsized or unintended. Active risk positions at single stock level typically range from 0.5% to 5%.

Read more
Back
Risk: 10

Company Description

Founded in 1931, M&G Investments employs more than 2,000 people worldwide, including 350 investment specialists. The company was formerly owned by Prudential plc, but de-merged in 2019 to become listed on the London Stock Exchange. It focuses primarily on fixed interest and equities, but also invests in multi-asset and real estate. Many of its fund managers have been with the company for more than 20 years. Managers are given freedom to implement their own style on funds.

Fund Performance

Close

Risk

Close

Managing risk is integral to the investment approach, with the team maintaining a constant balance between stock picking and risk navigation. Stock-specific risk is expected to account for most of the fund’s risk. The team monitors correlations among portfolio holdings and among key underweights to stay on top of diversification levels.

A separate risk team provides ongoing analysis to assess the fund’s behaviour in various market scenarios and challenge decisions. However, it is the fund managers who are ultimately responsible for the risk management of the fund. The managers recognise that bottom-up portfolios often result in sector biases, so they will limit a position if they feel that the sector bet is outsized or unintended. Active risk positions at single stock level typically range from 0.5% to 5%.

Investment process

The team’s research covers the entire benchmark index - MSCI Japan Index - but it focuses mainly on a core universe of around 250 stocks that have been closely followed over many years. All team members, including the fund managers, have analytical responsibilities for stocks within the fund’s universe.

The managers aim to understand how a company works, how it generates profit, whether those returns are sustainable, what is the potential upside and downside and what its value proposition is. This enables them to understand the context of the company within its industry sector to get a full picture of its business outlook. Regular meetings are held with company management teams, both in London and Japan.

By maintaining a rich and consistent dialogue with companies in the universe, the managers find that they frequently develop insights and ideas that are not thrown up by numeric-based screens. One member of the investment team - Dr Ryohei Yanagi - is the consultant for Japanese Corporate Engagement, highlighting the importance of this aspect of the process.

The team’s stock-picking approach aims to identify a large, exploitable gap between the price the market ascribes to a stock and its own estimated value of that stock, based on proprietary research. The managers will only invest when they have absolute conviction.

The investment process is based on the principle that there are four key elements of the ‘investment problem’: independence, conviction, fallibility and uncertainty. Independence is addressed with differentiated idea generation – the team wants the portfolio to stand out from other portfolios. Lack of conviction will increase the chance of making the wrong investment decision at the wrong time, which can be avoided with thorough research of a consistent universe of stocks. Fallibility refers to the unavoidable reality of getting it wrong. The team has to ensure that its approach thrives despite this, by insisting on margin-of-safety before investing and a system to identify potential losers after it invests. Uncertainty addresses the fact that most of the value of securities lives in an unforecastable future. The team can’t predict the future, instead it focuses on pricing risk through a probabilistic framework.

The managers are long-term investors, but when they realise that they have got a stock decision wrong, they will exit that stock and move on. They constantly re-evaluate their investment decisions and rationale, irrespective of whether a position is in profit or in loss, and they are not afraid to sell at a loss, or double down.

The investment style is neutral, however the cautious approach pushes it towards value, even though key aspects of the investment and thought processes differ from those of a typical value manager.

Risk

Managing risk is integral to the investment approach, with the team maintaining a constant balance between stock picking and risk navigation. Stock-specific risk is expected to account for most of the fund’s risk. The team monitors correlations among portfolio holdings and among key underweights to stay on top of diversification levels.

A separate risk team provides ongoing analysis to assess the fund’s behaviour in various market scenarios and challenge decisions. However, it is the fund managers who are ultimately responsible for the risk management of the fund. The managers recognise that bottom-up portfolios often result in sector biases, so they will limit a position if they feel that the sector bet is outsized or unintended. Active risk positions at single stock level typically range from 0.5% to 5%.

ESG

ESG - Integrated
M&G has clear and defined categories for the ESG focus of its fund range. There are also some company-wide exclusions for all funds, such as cluster munitions. M&G believes that ESG factors can have a material impact on long-term investment outcomes, so it considers such factors as a fundamental component of their investment process. As well as identifying risks, understanding ESG can also be a source of returns, whereby a firm with a product or service that is a solution to ESG issues may have improved fundamentals as it capitalises on this opportunity. The team uses a proprietary, firm-wide system for scoring ESG. This not only helps with thought leadership, but also supports monitoring and engagement after investment.

Related Insights

The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.