Focus on: Schroder Tokyo
Our ‘focus on’ articles each look at a specific investment fund within our top sixty. We take an in-depth look at each fund to give you an insight into what it takes to make the grade.
Each ‘focus on’ examines the objective of the fund, an analysis of recent performance, the manager, charges and other factors.
Within this ‘focus on’ we take a closer look at the Schroder Tokyo fund. This fund sits within the Japan Equities asset class.
Fund objective
This fund aims to achieve long-term capital growth through participation in the growth of the Japanese economy.
It invests primarily in the strengths of the Japanese economy, such as its manufacturing industry (and in particular on those parts of the manufacturing sector that have the ability to exploit newly emerging technology). The fund also invests in sectors benefiting from structural change in the economy.
This fund invests in directly held transferable securities but can also invest in collective investment schemes, warrants and money market instruments.
Track record
This is a second quartile fund over one and five years, with first quartile performance over three years.
For the year to date it has returned 15.33% compared to a sector average return of 10.63%. This places it 32nd out of 111 funds in the IMA sector.
This fund has a strong and consistent long-term performance record, demonstrating first or second quartile performance in discrete annual periods back to 2006/07. In the previous two discrete annual periods it delivered fourth quartile performance, but with reasonably small underperformance of the sector average returns in absolute terms.
The managers
This fund has been managed by Andrew Rose for the past five and a half years. He is well suited to understand the particulars of Japanese investment, as he holds a degree in Japanese and Politics.
Rose began his investment career in 1981 when joining Schroders. He moved to Toyko in 1984 before returning to London in the late 80’s to take responsibility for Japanese equity investments for UK and European clients. He went back to Japan for a spell in the 90’s and returned to the UK in 1999 as Joint Head of the Japanese Equity Team.
Rose remains based in London but has the support of a well resourced team on the ground locally in Japan, including four fund managers and twelve analysts.
Style
This is a large-cap orientated Japanese equity fund with a flexible and undogmatic investment style. The manager has a preference for investing in established, profitable companies with attractive valuations relative to the market.
The team has adopted a bottom-up investment approach based on proprietary research. It is worth noting that the manager has a lot of freedom in running this fund. He is able to take significant stock positions.
Charges
The fund has a 5.25% initial charge and a 1.5% annual management charge, with a total expense ratio (TER) of 1.67%.
For the BrilliantWithMoney SIPP, this initial charge is discounted to nil and the annual management charge is discounted to 0.75%.
Conclusion
This is a well established Japanese equity fund, seemingly overlooked by some of the fund ratings agencies. The performance track record appears to be improving in more recent years. Whilst the manager takes some quite bold positions, in the main this fund is well diversified and internal risk controls should ensure that exposure to medium or small-cap stocks do not lead to excessive risks.
Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice.
The small but important print: This article was produced for information only and should not be considered a recommendation to buy, sell or hold a particular investment fund. Seek advice from a professional independent financial adviser before making a decision. The performance data in this article was provided by Financial Express and was correct as at 4th October 2009.
