GLG Japan fund sticks with strategy

The managers of GLG’s £1.1bn Japan CoreAlpha fund have maintained they will stick to their investment strategy, after the fund plunged into the bottom decile over three years.

Jeff Atherton, who works on the vehicle with Stephen Harker and Neil Edwards, said the managers’ investment style focuses on value stocks and large caps – two areas that have underperformed consistently since the summer of 2009.

“What we are saying to clients is that we don’t think we are doing anything wrong,” Mr Atherton said.

“How we invest is temporarily out of fashion but value has beaten growth in Japan two-thirds of the time and this period where we are finding things against us is about as long historically as it has lasted.”

The fund’s five-year returns remain firmly in the top performance decile – it gained 11.5 per cent, ranking it second out of 48 funds in the IMA Japan sector.

But over three years its 0.3 per cent gain ranks it 53 out of 56 funds in the sector with a three-year track record, compared with an average 10.7 per cent gain for the peer group.

Mr Atherton said the team was standing by its investment style and added the fund’s focus on establishing aggressive active positions relative to its benchmark index would not be changing.

At the end of May, the fund had a 9 percentage point overweight in banks and an 8.8 percentage point overweight in electronics manufacturers compared with its benchmark index.

“We are reaching something of a limit as to how much we want to put into one area,” Mr Atherton said.

“We have 30-31 per cent in financials and it is probably getting to that level for electronics.”

The fund’s largest position is a 7 per cent holding in Sony while the vehicle also has large weightings in Panasonic and Ricoh. Nintendo and Fujifilm also feature in the top 10 holdings as at May 31.