M&G (Lux) Japan Smaller Companies Fund

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the Japanese smaller companies stockmarket over any five-year period.

Investment policy and strategy

Core investment: At least 80% of the fund is invested in the shares of smaller companies that are domiciled, or conducting the major part of their economic activity, in Japan. The fund usually holds shares in fewer than 50 companies. Smaller companies are defined as those in the bottom third of total market capitalisation of all publicly listed companies in Japan.

Other investment: The fund also holds cash or assets that can be turned quickly into cash.

Strategy in brief: The investment manager selects stocks from across a wide range of industries.

The focus is on stocks where the share price is not fully reflecting the level of earnings that the company can sustain over the medium to long term. The investment manager believes this can happen because human biases can temporarily prevent investors from making objective assessments of the prospects for company earnings. The investment manager applies disciplined and rigorous fundamental analysis to ensure a high level of conviction around the valuation for each of the companies held in the fund.

Performance comparator: The fund is actively managed. The Russell Nomura Mid-Small Index is a point of reference against which the performance of the fund may be measured.

Risks associated with the fund

The value of investments and the income from them will rise and fall. This will cause the fund price, as well as any income paid by the fund, to fall as well as rise. There is no guarantee the fund will achieve its objective, and you may not get back the amount you originally invested.

Changes in currency exchange rates will affect the value of your investment.

The fund invests mainly in smaller companies in Japan. This type of fund can experience bigger price changes when compared to a fund which invests in larger companies.

This fund holds a relatively small number of investments and, as a result, may experience larger price rises and falls than a fund which holds a larger number of investments.

Where market conditions make it hard to sell the fund’s investments at a fair price to meet customers’ sale requests, we may temporarily suspend dealing in the fund’s shares.

Some transactions the fund makes, such as placing cash on deposit, require the use of other financial institutions (for example, banks). If one of these institutions defaults on their obligations or becomes insolvent, the fund may incur a loss.

Other information

The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.

 

Fund Team

Johan du Preez

Johan Du Preez - Fund manager

Johan du Preez has managed the M&G Japan Fund and the M&G Japan Smaller Companies Fund since joining the M&G Equity team in 2015. He began his investment career in 1998 as an analyst with Prudential Portfolio Managers, South Africa (PPMSA). In the following year, he became a senior portfolio manager and shortly afterwards, a director of PPMSA. In 2004, Johan transferred to Prudential’s asset management business in Asia where he specialised in Japanese equities as an investment director. He graduated from the University of Witwatersrand, Johannesburg, South Africa with a Bachelor of Economics (Science) in mathematical statistics and actuarial science in 1992. He also holds a masters of economics degree from the University of Cape Town, South Africa. Johan is a CFA charterholder.

 Team member biography
John Lothian

John Lothian - Deputy Manager

John Lothian joined M&G in March 2011 as a specialist on Japanese equities. His roles have included senior analyst on the M&G North American Dividend Fund and M&G Global Leaders Fund, as well as senior research analyst covering global consumer, healthcare, and technology sectors. He was appointed deputy manager of the M&G Japan and M&G Japan Smaller Companies funds in September 2015. Prior to M&G, John co-managed a Japanese equity fund at Occam Asset Management. Before that, he covered Japanese stocks at Lazard Asset Management in London. John started his career at Lehman Brothers in Tokyo. He has an MBA from Columbia Business School, an MA in international relations from The Johns Hopkins University School of Advanced International Studies (SAIS), and a BA in Greek and Latin from The Catholic University of America. John is fluent in Japanese and is a CFA charterholder.

 Team member biography

Ratings

Rating is at a share class level

3 Star Rating

Ratings as at 31/01/2019. The Morningstar Overall Rating. Copyright © 2019 Morningstar UK Limited. All Rights Reserved. The Morningstar Analyst Rating™. © 2019 Morningstar. All Rights Reserved. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Ratings should not be taken as recommendation.

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