Investec unveils Ucits onshore Japan portfolio

Investec Asset Management is launching an onshore Japan fund. The Ucits III portfolio will be managed by Philip Whittome, who has run Investec’s offshore Japan fund for more than nine years.

The fund will be run in exactly the same way as the offshore fund, says Whittome, “but there will be a different selection of stocks and we will be very conscious of risk”.

Whittome says it is important to be aware of risk in the Japanese market, “especially regarding time: when to get in and when to get out”. “This new fund will be unusual in the way that it looks at risk,” he adds.

Whittome, who has worked on Japanese equities for nearly 20 years, says Japan is a fairly volatile market. “The way we are approaching this fund is by stressing this volatility” he says.

“We will be careful not to be too over the top in terms of over and under-weighting: limiting the huge skews in the portfolio. We are highly cautious about taking large stock and large sector bets. You don’t want to have too many correlated positions.”

Whittome’s offshore Japan fund has shown steady performance since its inception, outperforming by about 2.5- 3% a year. For the calendar year 2005, it outperformed the Topix benchmark by 5.1%, according to the group.

“You can still get good performance by being risk averse,” Whittome says. “Over longer periods of time you reap the benefits.”

He says this is the ideal time for launching an onshore Japan fund. “The economic recovery is continuing,” he adds. “The consensus forecast for growth in fiscal year 2006 is above 3% real GDP growth, which is much higher than six months ago.

“Earnings growth is also strong and expectations are that companies will have grown in profits by 27%.”

In addition, Whittome points to a change in the mindset of Japanese managers. “They are much more profit conscious,” he says. “It is very different now to what it used to be.”

The onshore Japan fund, which Whittome refers to as “very plain vanilla”, will carry an annual management fee of 1.5% and a minimum investment of 1,000.