Japan Mid Small Cap Value Strategy

Investment Approach

The Japan Mid Small Cap Value aims to deliver an attractive return versus the Benchmark by investing in undervalued Japanese companies using a fundamental approach, while also aiming to improve corporate value through engagement with portfolio companies.

Not a typical value strategy
• Whilst traditional value strategies focus on the single criteria of PER or PBR, we use our proprietary quantitative model based on PBR and ROE metrics, with the aim of outperforming the benchmark over the long term.
• We focus on “undervalued stocks" from a long-term perspective rather than focusing on short-term earnings trends.

Use of proprietary AI
• Since 2017, we started using AI (external AI engine) from a mid- to long-term perspective.
• Since April 2022, we introduced SMDAM’s proprietary AI engine (joint research with a leading national institute in Japan, the National Institute of Informatics). 
• The use of AI enables the processing of large amounts of information, stability, immediacy, and continuity of data.

Improving corporate value through engagement
• Since 2016, we have been actively seeking to invest in companies where we are able to work with management to resolve corporate issues to the benefit of shareholders. 
• In 2023, the TSE announced several measures designed to improve the corporate performance of TSE members and to promote the interest of shareholders. 
• We continue to actively identify and engage corporates who both require and are open to change.

Key Strengths

Downside protection and investment efficiency:
Driven not only by diversifying holdings (i.e. diversifying idiosyncratic risks) but by efforts to diversify sources of risks, providing a certain level of downside protection, leading to a respectable information ratio.

Proprietary artificial intelligence engine:
A unique feature of the firm’s proprietary AI engine (PETAL) is that it uses qualitative information, whereas most AI engines developed for investments use “quantitative data”.

PM expert in AI development for investments:
Kazuhiro Bena was heavily involved in the process to design & develop PETAL and is an expert in the field of AIs developed for investments.

Explore the related fund

No performance information is available as the fund is newly launched.