At AlbaCore, we focus on the long-term. As one of Europe’s leading alternative credit specialists, we invest in private capital solutions, opportunistic and dislocated credit, and structured products. 

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Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

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Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.

Backed by a unique blend of research, portfolio construction and risk management, focused on uncovering original insights and translating them into investment strategies that are active and systematic, aiming to generate alpha.

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Specialists in equity portfolios in Asia Pacific, emerging markets, global and sustainable investment strategies

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Important Note Click to maximise

This is a financial promotion for The First Sentier Japan Strategy. This information is for professional clients only in the UK and elsewhere where lawful. Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back sigfsnificantly less than the original amount invested.
  • Currency risk: the Fund invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the Fund and could create losses. Currency control decisions made by governments could affect the value of the Fund's investments and could cause the Fund to defer or suspend redemptions of its shares. 
  • Single country / specific region risk: investing in a single country or specific region may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk. Smaller companies risk: Investments in smaller companies may be riskier and more difficult to buy and sell than investments in larger companies.

For details of the firms issuing this information and any funds referred to, please see Terms and Conditions and Important Information.  

For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document for each Fund. 

If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

Part 3: Unique business models - "Only in Japan"

Dispelling the myths and misconceptions of investing in Japan

Throughout this six-part series, we aim to address some of the most common investor concerns about Japan equities and highlight the opportunities for sustainable growth in this market.

Despite the perception that there is little or no growth in Japan, our core portfolio holdings in the FSSA Japan Equity Fund have been able to adapt and grow despite economic headwinds, and have delivered sustainable earnings growth and attractive shareholder returns.

In chapter three, we look at unique business models – found “only in Japan” 

Part 3: Unique business models - "Only in Japan"

Tourists who have visited Japan would most likely agree that it is a country like no other. Those who have yet to be introduced to this unique country may find aspects of its inimitable culture and customs unfamiliar, perhaps even inscrutable. From an investment perspective, this same unfamiliarity with the Japan market – with dissimilar investment opportunities compared to other equity markets – could present investors with considerable challenges.

We believe that a deep knowledge of the local market and an understanding of the cultural and societal aspects of Japan are critical in the research and analysis of Japanese companies – especially if there are no direct Western parallels to draw a comparison. As a team, we spend most of our time visiting companies and carrying out research trips to the countries where we have made investments (though we have temporarily moved to “virtual meetings” due to Covid-19). We have found that the Japan market contains businesses that are uniquely Japanese.

For example, M3 is a global leader in online medical-related services. The company launched its pharmaceutical marketing services (information on drugs emailed to doctors) around 20 years ago and has since expanded its business areas to include contract research, job placements and medical records software. There is no Western company equivalent that provides similar services to M3.

One of the main reasons for M3’s success is its huge following among doctors (around four million subscribers globally), which puts the company in a position to transform the sales process of pharmaceutical and medical products.

While Japanese drug companies spend the majority of their annual marketing budgets on sales representatives and related commissions, just 2% is allocated to online marketing. On the other hand, doctors spend twice as much time collecting materials on the internet (using informational sources like M3) compared to the time they spend talking to pharma reps. We believe this represents a huge market potential for M3.

Doctors benefit from having reliable and trusted information at their fingertips, which saves time that could be better utilised elsewhere (for example, by seeing more patients). Drug companies benefit by using “pay-for-performance” services to promote products directly to doctors on M3’s medical platform, which reduces the costs of hiring traditional medical representatives.

M3 has no direct equivalent that investors could compare to, which makes it a challenge to understand the market and long-term growth opportunity. Only after meeting with management multiple times (and with different team members, to gain fresh perspectives) did we start to grasp the enormity of its potential, which eventually resulted in a purchase of the company’s shares.

Katitas, which buys old homes or auctioned-off houses, remodels them and then sells them on to new or first-time buyers at a reasonable price (usually at a 50% discount to new properties), is also unique to Japan. In the past, houses in Japan were not built to last for more than 30 years – they were constructed quickly and cheaply to serve a growing population after the Second World War. As a result, many have fallen in value over time, while those left vacant are often neglected or abandoned by their owners.

There are currently more than 8.4 million vacant properties (“akiya”) around Japan – one out of every seven properties – and this has been rising steadily over the past five decades. Katitas, which means “adding value” in Japanese, has created an entirely new market from this previously untouched segment, with a clear value proposition that not only provides quality and affordable homes, but also contributes to the revitalisation and redevelopment of local regions in Japan.

Established for more than 20 years, Katitas has accumulated years of experience in buying the right properties at a low price and renovating at a reasonable cost. As such, we believe Katitas is well positioned in a niche market – and there are no sizeable competitors in this space. Though the company is still relatively small with a market cap of just USD1.9 billion, we would expect it to grow considerably larger in the years to come.

Look out for chapter four of this six part series, as we continue to dispel some of the most common myths and misconceptions. 

Important Information

This document has been prepared for informational purposes only and is only intended to provide a summary of the subject matter covered. It does not purport to be comprehensive. The views expressed are the views of the writer at the time of issue and may change over time. It does not constitute investment advice and/or a recommendation and should not be used as the basis of any investment decision. This document is not an offer document and does not constitute an offer or invitation or investment recommendation to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this document.

This document is confidential and must not be copied, reproduced, circulated or transmitted, in whole or in part, and in any form or by any means without our prior written consent. The information contained within this document has been obtained from sources that we believe to be reliable and accurate at the time of issue but no representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information. We do not accept any liability whatsoever for any loss arising directly or indirectly from any use of this information.

References to “we” or “us” are references to First Sentier Investors.

In the UK, issued by First Sentier Investors (UK) Funds Limited which is authorised and regulated by the Financial Conduct Authority (registration number 143359). Registered office Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB number 2294743. Outside the UK, issued by First Sentier Investors International IM Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registered number 122512). Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB number SCO79063.

Certain funds referred to in this document are identified as sub-funds of First Sentier Investors ICVC, an open ended investment company registered in England and Wales (“OEIC”) or of First Sentier Investors Global Umbrella Fund plc, an umbrella investment company registered in Ireland (“VCC”). Further information is contained in the Prospectus and Key Investor Information Documents of the OEIC and VCC which are available free of charge by writing to: Client Services, First Sentier Investors (UK) Funds Limited, Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB or by telephoning 0800 587 4141 between 9am and 5pm Monday to Friday or by visiting Telephone calls may be recorded. The distribution or purchase of shares in the funds, or entering into an investment agreement with First Sentier Investors may be restricted in certain jurisdictions.

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First Sentier Investors entities referred to in this document are part of First Sentier Investors a member of MUFG, a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of any investment or entity referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk including loss of income and capital invested.

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