By MARCEL PORCHERON 31/08/2006
Initially rated three stars at the launch of the investment trust (the open ended funds are currently permitting new investment) we again met Ken Nishizawa and his team in Tokyo. Adopting a framework which attempts to promote creative thinking, the manager looks for companies with the potential to grow earnings, especially as a result of new opportunities created by reform and deregulation in the Japanese economy. Typically the portfolio is focused on small and mid cap companies where the average market cap is circa £2bn (larger than the Legg Mason Japan and Prospect Japan around £400m-£500m, although this could change). Investors in the IT will be aware that Funnex invest in some highly illiquid companies, while the trust's performance has also suffered over the 3 months to August 2006 as the manager invested aggressively into a falling market. Funnex generally don't care for short term market movements and the profile of this trust (often investing in high PE companies) suggests it is likely to remain volatile.
Nishizawa has an MRI 99.8% over 11.9 years at August 2006. The IT, open ended onshore fund and open ended offshore fund portfolios are all similar, with variations a result of the Investment Trust's holdings in less liquid names, and the different times at which the funds were invested. The IT is currently on a 3.1% premium (market close 30/08/06) and is ungeared.
Upgraded to 4 stars