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JOHCM explores Japan

J O Hambro Capital Management has established the JOHCM Japan Fund, a Dublin-domiciled Oeic that invests in between 40 and 60 Japanese stocks.

The Fund is benchmarked against the Japanese Topix index, although the fund manager, Scott McGlashan is not bound tightly to this.

McGlashan has almost 30 years&#39 experience in fund management, including 23 years specialising in the Japanese market. He joined JOHCM earlier this year after almost four years at Jade Absolute, which he founded in 2000. Prior to that he spent 15 years at Invesco Perpetual.

McGlashan will look for attractively priced stocks with good growth prospects and strong balance sheets. In his view, most managers focus on the top 100 Japanese stocks out of a universe of around 3,000, so there are many under-researched stocks in less fashionable sectors which could rise in price even if the market stays level.

Various research methods will be used to find these companies but being undervalued is not enough for a stock to be included in the portfolio &#45 there has to be a reason to anticipate change in its fortunes, such as restructuring. McGlashan will also operate a disciplined selling process when a stock is no longer performing well, which could lead to a high turnover of stocks.

The Japanese market appears to be reaping the rewards of restructuring and a strong trading relationship with China as profits are improving. At the end of April this year there was a correction in prices but this adjustment was brought about by global influences and has not affected many commentators&#39 views that Japan is starting to recover.

However, one potential problem is that during market dips, small and mid-cap holdings &#45 which make up at least 75 per cent of this fund &#45 may be more difficult to sell than larger companies.

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