Henderson Japanese Smaller Companies investment trust is to move to a more growth-oriented investmen...
Henderson Japanese Smaller Companies investment trust is to move to a more growth-oriented investment style, writes James Thorneley.
The change follows the decision to manage the trust out of the group's Tokyo offices.
Yuji Tsukagoshi has taken over running the portfolio from London-based head of Japan equities William Garnett. The group felt it was now essential to manage the trust from a local base due to the large number of IPOs in Japan.
Merrill Lynch's investment trust team thinks Tsukagoshi will start to invest in companies which are not yet making profits. At the moment the chief valuation tool is the PEG ratio, and all companies in the portfolio have a history of making profits. Tsukagoshi will instead use a price-to-sales valuation technique, according to Merrill Lynch.
The average market capitalisation trust's holdings will also be increased. Under Garnett the portfolio tended to be invested in the bottom 20% of market. Tsukagoshi aims to increase the weighting in the TSE 2 from 25% to 40%. With these changes in style, Merrill Lynch expects a high level of portfolio turnover during the short-term with the manager concentrating more on new Japan stocks, such as IT consultancies and advertising agencies.
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