This site uses cookies

To give you the best possible experience, the GAM website uses cookies. You can read full information of our cookie use here. Your privacy is important to us and we encourage you to read our privacy policy here.

OK

GAM Star Japan Leaders

Reasons to Invest

Japanese growth

Many Japanese companies are delivering strong growth while at low price-earnings multiples, meaning valuations are attractive especially compared to other developed markets.

Improved corporate governance

An evolving corporate culture and a growing number of activist shareholders have prompted companies to refocus on returns on equity and distribution of capital.

Solid investments

High quality equity investing focuses on successful businesses, which are growing solidly and are backed up by strong financial balance sheets and capable management.

Potential for attractive returns

Selecting value stocks that are considered undervalued by the market creates an opportunity to outperform the market.

Our Edge

Highly experienced team

The specialist investment team has over 20 years’ experience investing in Japanese equities.

Disciplined process

The team focuses only on businesses which they believe have superior long-term growth potential and show a high return on equity and low leverage. Such stocks are selected only at a significant discount to calculated fair value.

Equal weighting approach

The concentrated portfolio is equally weighted by NAV and rebalanced on an annual basis to ensure diversification across business models and mitigate single position risk.

Long-term horizon

The team’s investment horizon is typically more than five years, in a bid to maximise returns by investing in companies believed capable of achieving long-term, sustainable growth.

Philosophy and Process

Investment Philosophy

The team believes that a small number of leading companies deliver superior portfolio returns over the long term, if purchased for ‘good value’. For this buy-and-hold strategy, the team applies key success factors including stringent selection based on financial criteria; deep analysis of a business model’s risks and benefits (including pricing power and financial strength); buying ‘good value’ stocks when valuations are cheap; and patience (holding stocks as long as no valid reason exists to sell). Through this approach, the team believes it is possible to participate in the value creation process of superior business models and deliver attractive returns for investors.

Investment Process

The team uses a disciplined, bottom-up process, which starts with a quantitative screening of the Topix universe. Using four financial filters, around 100 successful businesses are identified. In-depth, fundamental company analysis is conducted, focusing on pricing power and financial strength, to understand the past success of these businesses. If the business model is sustainable, the team applies fair value analysis, using their own estimates. An investment is made when a company’s price offers a minimum of 30% discount versus its calculated fair value. The concentrated portfolio of 20-30 large and mid-cap stocks is diversified across business models and rebalanced annually to equal weights.

1. Screening

  • Sales/profit growth, capital intensity, profitability and balance sheet structure
  • 2,100 stocks reduced to approximately 100

2. Fundamental analysis

  • Understand past success of superior businesses
  • Focus on pricing power and financial strength

3. Fair value analysis

  • Appraise value and invest if ≥30% discount
  • Stocks followed until required discount is reached

4. Portfolio construction and maintenance

  • 20-30 equally weighted positions
  • Disciplined, case-by-case approach to closing positions

Investment Team

GAM Star Japan Leaders is managed by the Japan equity team, led by Ernst Glanzmann. Ernst has built an outstanding track record of strong returns versus the benchmark, during his 25 years of analysing and investing in Japanese equities. The team also comprises portfolio manager Reiko Mito and junior portfolio manager Lukas Knüppel.

The team has in-depth knowledge of the Japanese corporate sector, equity market and economy, based on many years of continuous analysis, supported by company visits and meetings with senior management.

The team is responsible for research, stock selection, trading and risk management. However, an additional risk oversight function is performed independently by GAM’s risk teams.

We believe that a small number of leading firms deliver superior portfolio returns over a longer holding period, if purchased for good value
Ernst Glanzmann, Investment Director.

Fund Information

Key Risks

Currency Risk – Non-base currency share class

Non-base currency share classes may or may not be hedged to the base currency of the Fund. Changes in exchange rates will have an impact on the value of shares in the Fund which are not denominated in the base currency. Where hedging strategies are employed, they may not be fully effective.

Concentration Risk


Concentration in a limited number of securities and industry sectors may result in more volatility than investing in broadly diversified Funds.

Single Country Risk


Investment in companies of a single country may be subject to greater political, social, economic and tax risks and may be more volatile than investments in more broadly diversified funds. Local tax law may change retrospectively and without notice.

Equity

Investments in equities (directly or indirectly via derivatives) may be subject to significant fluctuations in value.

Capital at risk

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Resources

Fund Profile - GAM Star Japan Leaders

Risk management at GAM

Contacts

GAM Star Japan Leaders is a sub-fund of GAM Star Fund p.l.c., registered office at George’s Court, 54-62 Townsend Street, Dublin 2, Ireland, an umbrella investment company