Wolfgang Fickus, a member of the firm’s investment committee, argues that being scared off by macro factors like the ineffectiveness of Abenomics, the stability of the Yen or weak demographics could cause investors to miss out on some significant long-term opportunities within the asset class.
Japan has ‘strong domestic growth themes’ which can overcome macro headwinds if the right stocks are selected, Fickus explained.
Chief among these themes is taking advantage of the demographic shifts rather than running away from them. Older, wealthier women are becoming a bigger market for companies which can offer premium products they like, such as cosmetics maker Pola Orbis, Fickus said.
At the other end of the scale. Young Japanese women are becoming more cost conscious so companies like Pola Orbis are doing well with budget ranges targeted at them. The key is to avoid the middle of the road offerings which do not target any particular group, Fickus explained.
Another example of the trends Comgest is targeting is an increased appetite in Japan for discount food retailing, along the lines of what has been seen in Europe with the likes of Aldi. In Japan, this trend can be accessed through stocks such as retailer Don Quijote.
The Comgest Growth Japan fund has enjoyed a strong run recently returning 17.79% annualised for the past three years versus 8.83% for its benchmark, the TOPIX.
The firm is planning to roll out a new sterling share class for the fund in the near future to make it more straightforward for UK investors to access the strategy, according to portfolio manager Chantana Ward.
A hedged euro share class is also in the works for launch in the third quarter of 2016 to take currency concerns out of the equation for investors which see that as an issue.
Comgest has around €20bn in assets under management and offices in Paris, Dublin, Hong Kong, Tokyo, Singapore and Düsseldorf.
