This fund is run by a very seasoned team of five investors - the most junior member has 12 years of Japanese experience. The company is totally manager-owned and only runs Japanese money. The group carries out rigorous balance sheet analysis and has shown skill at finding undervalued assets, with a good awareness of value traps.
The performance is likely to be volatile against the index due to the strong mid/small cap value bias, however over a 3 year period the product should outperform the Topix benchmark. The deep value names have tended to provide support in falling markets so that the fund has tended to outperform in this scenario.
The high expected tracking error means that this product is probably better suited for investors with a reasonably long time horizon who can tolerate short-term underperformance when small cap value is out of favour. The manager has underperformed more recently so now could be a good time to make an allocation. As a result we have upgraded our rating to five stars.
Investors should note that this fund is not available via Cofunds or FundsNetwork.