Understanding The Fund: Aberdeen Japan Equity Fund
Chern-Yeh Kwok, Head of Investment Management, Japan at Aberdeen Investment Management K.K., explains the investment process and strategy behind the Aberdeen Japan Equity Fund.
How long have you been managing the Aberdeen Japan Equity Fund and what do you think was the biggest challenge you faced during this time?
- Has been looking at Japanese equities in the Singapore Aberdeen office but moved to Tokyo in January 2011
- Largest challenge so far was trying to get a sense over the concerns from the March 11, 2011 earthquake disaster e.g. how supply chain issues, radiation concerns etc will affect the Japanese economy
How many members are there in the investment team and where is the team based?
- Team is primarily based in Tokyo with 4 members
- Supported by a local team in Singapore with 3 members and other members
- Tokyo team is more on the ground and engage with companies directly
How does the team generate investment ideas?
- There are many ways to generate investment ideas
- There are many companies trading at attractive valuations in Japan, key is to identify those that have decent prospects over time
It is stated that the fund uses the Topix as its benchmark. How much consideration is given to this benchmark when selecting fund holdings?
- Team is aware of benchmark but does not regard it when constructing the portfolio
- Stock selection is identified from a bottom-up perspective
Can you briefly described the sell discipline employed by the fund (on both upside as well as downside)?
- Investment process focuses on buying the companies the fund is comfortable to hold for a long time
- 2 things the team looks out for: quality and valuation
- Fund will exit positions when there is deterioration in quality or when valuations are too high
- Other scenarios for exiting of positions include corporate actions such as takeover bids
Lastly, what is the maximum cash level the fund can hold?
- Cash is treated as a residual in all Aberdeen funds so it's usually 5% or lower
||04 May 2012
||Understanding The Fund: Aberdeen Japan Equity Fund