Japanese Equity Strategy
Japanese Equity Strategy

Japanese Equity Strategy

 
 
 
Summary

The Japanese Equity Strategy seeks long-term capital appreciation by investing in Japanese stocks that have market capitalizations of greater than US $400 million. To achieve its objective, the strategy adopts a bottom-up approach to identify undervalued, quality business franchises that trade at a substantial discount to their long-term intrinsic value.

 
 
Investment Approach
Philosophy

The team believes that the broad Japanese equity universe is inefficiently valued. Over the long term, however, the team believes that the price of an asset will revert to its true intrinsic value, thereby offering investors in undervalued stocks the potential opportunity for superior returns.

 
Differentiators
A highly-experienced investment team

The team’s 27 investment professionals have an average 14 years investment experience.

High conviction approach

Portfolios are conviction based; those stocks we believe have the greatest potential make up a larger part of the portfolio.

Risk-aware portfolio construction

Final portfolio weights will take in to consideration the total risk of the portfolio in addition to the index weights and conviction levels for individual stocks.

 
 
 
Investment Process
1
Universe

Approximately 1000 stocks are pre-selected from all listed Japanese stocks based on liquidity and capitalization.

2
Quantitative Screening

The team selects ‘Research Targets’ based on a rich-cheap screen.

3
Profit Cycle Analysis

The team then performs a combination of fundamental analysis and interaction with company management identifies companies with an improving Profit Cycle outlook.

4
Portfolio Construction

The team follows a discretionary process, in which the lead portfolio manager weights the merits of investment targets along with overall portfolio risk, as assessed by Barra.

5
Portfolio Analysis

Finally the team assembles feedback of performance measures and factor analysis.

 
 
Portfolio Manager
CMA, Mitsubishi UFJ Asset Management Co., Ltd.
16 years industry experience
 
 
 
 

RISK CONSIDERATIONS  

Diversification does not protect you against a loss in a particular market; however it allows you to spread that risk across various asset classes.

 

This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Past performance is no guarantee of future results.

A separately managed account may not be suitable for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Any views and opinions provided are those of the portfolio management team and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

All information provided has been prepared solely for information purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

DEFINITIONS

Tracking error is the standard deviation of the difference between the portfolio and the benchmark returns. 

OTHER CONSIDERATIONS

The MSCI Japan Index is a free-floated adjusted market capitalization weighted index that is designed to track the equity market performance of Japanese securities listed on the Tokyo Stock Exchange, Osaka Stock Exchange, JASDAQ and Nagoya Stock Exchange. The MSCI Japan Index is constructed based on the MSCI Global Investable Market Indices Methodology, targeting a free-float market capitalization coverage of 85%.

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.

The weights, tracking error typical yield duration, and the number of issuers represent represent typical ranges and are not a maximum number. The portfolio may exceed these from time to time due to market conditions and outstanding trades. 

 

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Not FDIC Insured—Offer No Bank Guarantee—May Lose Value
Not Insured By Any Federal Government Agency—Not A Deposit

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