Investment Characteristics
Sector allocation utilizes a proprietary industrial classification method, while stock selection focuses on a company's medium- to long-term growth potential, bearing in mind the appropriateness of market prices. Company valuation is based on fundamentals, focusing on earnings growth. The difference between this valuation and value as perceived by the market provides the basis for investment decisions. At the same time, we exercise due caution regarding the appropriateness of the market valuation in relation to our evaluation of the fundamentals.
Investment Style
Growth at a Reasonable Price (GARP)
Investment Target, Sources of Excess Return
TOPIX (including dividends) is used as the benchmark. We aim to exceed this benchmark by at least 3% over the medium to long term. Sources of excess return are based on stock selection (70%) and sector allocation (30%).
Investment Process
We conduct sector allocation based on our 21 sector classifications, using both quantitative and qualitative analysis methods. Final sector allocation decisions are based on the judgment of the portfolio manager. At the same time, each issue is analyzed in depth based on company visits by analysts. Then, a rating of A through E is assigned based on the company's prospects for medium- to long-term earnings growth and the reasonableness of the market valuations.
Based on the rating of each issue and the sector allocation, we create model portfolios using issues that, in general, have received ratings from A to C. Portfolio construction also takes into account the portfolio manager's view on investment size and other factors.
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