M&G (Lux) Japan Smaller Companies Fund

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the Japanese smaller companies stockmarket over any five-year period.

Investment policy and strategy

Core investment: At least 80% of the fund is invested in the shares of smaller companies that are domiciled, or conducting the major part of their economic activity, in Japan. The fund usually holds shares in fewer than 50 companies. Smaller companies are defined as those in the bottom third of total market capitalisation of all publicly listed companies in Japan.

Other investment: The fund also holds cash or assets that can be turned quickly into cash.

Strategy in brief: The investment manager selects stocks from across a wide range of industries.

The focus is on stocks where the share price is not fully reflecting the level of earnings that the company can sustain over the medium to long term. The investment manager believes this can happen because human biases can temporarily prevent investors from making objective assessments of the prospects for company earnings. The investment manager applies disciplined and rigorous fundamental analysis to ensure a high level of conviction around the valuation for each of the companies held in the fund.

Performance comparator: The fund is actively managed. The Russell Nomura Mid-Small Index is a point of reference against which the performance of the fund may be measured.

Risks associated with the fund

The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.

The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.

The fund invests in shares of smaller companies which may be less liquid and more volatile in price than shares of larger companies.

The fund holds a small number of investments, and therefore a fall in the value of a single investment may have a greater impact than if it held a larger number of investments.

The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.

In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.

The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.

Further details of the risks that apply to the fund can be found in the fund's Prospectus.

Other information

The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.

 

Fund Team

Johan du Preez

Johan Du Preez - Fund manager

Johan du Preez has managed the M&G Japan Fund and the M&G Japan Smaller Companies Fund since joining the M&G Equity team in 2015. He began his investment career in 1998 as an analyst with Prudential Portfolio Managers, South Africa (PPMSA). In the following year, he became a senior portfolio manager and shortly afterwards, a director of PPMSA. In 2004, Johan transferred to Prudential’s asset management business in Asia where he specialised in Japanese equities as an investment director. He graduated from the University of Witwatersrand, Johannesburg, South Africa with a Bachelor of Economics (Science) in mathematical statistics and actuarial science in 1992. He also holds a masters of economics degree from the University of Cape Town, South Africa. Johan is a CFA charterholder.

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Ratings

Rating is at a share class level

3 Star Rating

Ratings as at 31/01/2019. The Morningstar Overall Rating. Copyright © 2019 Morningstar UK Limited. All Rights Reserved. The Morningstar Analyst Rating™. © 2019 Morningstar. All Rights Reserved. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Ratings should not be taken as recommendation.

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The value of the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.