Sumitomo Mitsui Trust Asset Management (SuMi TRUST), one of Asia's largest asset management groups with over USD 741 billion AUM*, is celebrating three years of outperformance of its Japan Small Cap II Fund, which launched in April 2018 and has over USD 100million assets under management (AUM).

Since inception the fund has returned +15.54% on a cumulative basis compared to +4.45% for its reference benchmark index, the Russell/Nomura Small Cap Index. The Dublin-domiciled fund, aimed at institutional investors in Europe and Asia, invests in listed Japanese small cap companies and seeks to achieve long-term capital growth through a bottom-up stock-picking approach backed by extensive fundamental research.

Compared to its benchmark index, the fund has a higher weighting in the information technology and healthcare  sectors. SuMi TRUST has been focussing its small cap strategy in these sectors because digitisation, combined with other trends like an ageing population, is transforming the social and industrial structure of Japan, creating new growth opportunities for small and nimble businesses. Recently this strategy has paid off following the campaign to improve digitisation by the country’s new Prime Minister, Yoshihide Suga, as well as the boom in home-working brought about by the Covid-19 pandemic, underpinning the fund’s performance.

Among the Japan Small Cap II portfolio’s top holdings are Ain Holdings, a pharmacy chain focusing on online medication and counselling; Raksul, an online sharing platform for printing and advertising poised to benefit from the country’s digitisation push; and Oisix Ra Daichi, an online grocery and meal kit delivery service company that has seen its subscribers’s base substantially increase in number during the pandemic.

Chief portfolio manager Satoshi Marui, who has over 20 years’ experience in Japanese equities, has been responsible for SuMi TRUST’s Japanese Small Cap strategy since its inception in 2005. He also manages SuMi TRUST’s original Japan Small Cap fund which has been soft-closed since 2018. The Small Cap II fund is similar to SuMi TRUST Japan Small Cap fund, and was launched because of increased investor demand for attractive investment opportunities in the growing Japanese small cap market. Compared to the latter, it invests in more liquid small cap stocks.

Satoshi Marui, chief portfolio manager of SuMi TRUST Japan Small Cap II fund, said: “This is a market where active management pays off. Japanese small caps are not well covered by analysts in comparison to their American or European counterparts, and a bottom up stock-picking strategy, informed by in-depth research to pick hidden winners,
can deliver strong returns.

“Technological innovation is changing Japan at a fast pace, generating new business opportunities. companies that can adapt to this, coupled with the ‘new normal’ post-Covid-19, will be key for long-term growth and small caps are often more suited to rapid change than larger businesses.We will continue to focus on detecting companies which have the potential to grow based on their own unique drivers over the mid to long-term as we believe these hold the key to generate returns for our investors.”

*As of 31 March 2021.

This marketing communication is issued by Sumitomo Mitsui Trust International Limited (“SMTI”). SMTI is authorised and regulated by the United Kingdom’s Financial Conduct Authority (the “FCA”), whose address is 12 Endeavour Square, London, E20 1JN, United Kingdom.

This marketing communication has been made available to you only because SMTI has classified you as a professional client in accordance with the FCA’s rules. If you have received this marketing communication from a source other than SMTI, you should contact SMTI before using it or relying on it. You must not send this marketing communication to any other person without first having received written approval from SMTI.

The information contained in this marketing communication (the “Material”) is being made available for information purposes only and is designed to provide information on the investment services which SMTI may offer to clients. Nothing in the Material amounts to or should be construed as an actual offer by SMTI to provide any investment services to any person. If SMTI agrees to provide any investment services to any person, those services will be the subject of a separate written agreement between SMTI and that person. Furthermore, the Material has not been prepared with any consideration of the individual circumstances of any person to whom it is communicated. Accordingly, it is not intended to, and does not, constitute a personnel recommendation in relation to the purchase or sale of, or exercise of any rights in relation to, any financial instruments or advice in relation to any investment policy or strategy to be followed. The Material also does not contain the results of any investment research carried out by SMTI and is not intended to amount to a financial promotion of any particular financial instrument which may be referred to in it.

While SMTI uses all reasonable endeavours to ensure the Material is accurate, it has not been prepared with a view to any person relying on it. Accordingly, SMTI accepts no responsibility for any loss caused to any recipient of this document as a result of any error, inaccuracy or incompleteness in the Material, nor for any error in the transmission or receipt of this communication.

Any enquiries regarding the products should be made to:
Hirofumi Hayashi
Head of Investment Management Department
Sumitomo Mitsui Trust International Limited
155 Bishopsgate, London EC2M 3XU, United Kingdom
Direct: +44 20 7562 8405
Sumitomo Mitsui Trust International Limited is authorised and regulated by the
Financial Conduct Authority
© Sumitomo Mitsui Trust International Limited 2024