Steve Harker has one of the best long-term track records in Japanese equities, although his current strategy (large cap focus) was only started in 2006.
The process is straightforward and looks to take advantage of two market anomalies that have existed in Japan - outperformance of value and mean reversion. Harker’s timing of buys and sells has been very good over time and is a key source of added value.
The main research done into the companies he buys is checking that they are not going insolvent - this is important since he buys laggards that have fallen out of favour in the market for some reason. Harker does not spend time forecasting earnings.
This fund has been topping the universe so there is a risk that there will be reversal of performance at some stage. However, the fact that Harker frequently cuts his winners and recycles the money into underperformers should alleviate this concern. Harker launched the fund in 2006 as he thought large caps were cheap - they have not outperformed yet so this could be a further kicker.
We have increased our rating to five stars.