Andrew Rose, longstanding manager of Schroder Tokyo (GB00BGP6BR86) and Schroder Japan Growth Fund (SJG), is to retire at the end of June and Masaki Taketsume (pictured, below) will run the funds from 1 July. But Schroders said the funds' investment strategy will remain the same.
Mr Taketsume has been part of Schroders' Japanese equity team since 2007, initially as a technology analyst and since 2017 as a fund manager working alongside Mr Rose, when he relocated to London from Japan in preparation for his succession. He has also collaborated on portfolio management with Mr Rose since 2014. Mr Taketsume started his career in investment in 1994 at Nikko Asset Management.
Mr Taketsume will be helped to determine the funds' investment strategy by Nathan Gibbs, investment director for Japanese equities at Schroders, as well as the wider Japanese equities team who currently support Mr Rose. Mr Gibbs has over 35 years of experience in Japanese equities and relocated to London from Tokyo in 2016.
Since Mr Rose started running Schroder Tokyo Fund in 2004 it has returned 140 per cent, versus 132 per cent return for the Topix index and the Investment Association (IA) Japan sector average return of 105 per cent. And since he started managing Schroder Japan Growth Fund in November 2007, it has made a share price total return of 116 per cent versus 99 per cent for the Topix. Over these periods both funds have grown in size.
However, recent performance has not been as good, in part due to Mr Rose’s value investment style, which has not been in favour. Neither fund has beaten its sector average over three years (see table below).
Mr Rose mainly invests Schroder Tokyo in large-cap stocks, picking companies whose share prices he thinks are depressed but which could rise sharply in the next three years, giving it a strong value bias. Schroder Japan Growth Fund also holds these kinds of shares but has a greater allocation to growth stocks.
Mr Rose has invested via the same process since the 1980s. He was based in Tokyo but relocated to London in 2006.
Performance
| Fund/benchmark | 1-year total return (%) | 3-year cumulative total return (%) | 5-year cumulative total return (%) | 10-year cumulative total return (%) |
| Schroder Tokyo | -5.37 | 51.04 | 67.16 | 138.36 |
| Schroder Japan Growth share price | -13.59 | 47.26 | 67.13 | 217.05 |
| Topix index | -4.01 | 47.66 | 68.55 | 129.9 |
| IA Japan sector average | -6.34 | 55.22 | 59.12 | 123.01 |
| AIC Japan sector average | -11.15 | 58.12 | 78.71 | 332.41 |
Source: FE Analytics as at 11/02/19
As a result of Mr Rose's forthcoming retirement, fund research companies The Adviser Centre and Morningstar have placed their positive ratings on Schroder Tokyo Fund under review.
Peter Brunt, senior analyst at Morningstar, said Mr Rose’s departure would mark a “significant loss” in experience for the Schroders team as he is one of the most experienced Japan equity managers.
“We consider the investment approach for this fund to be one of the strongest in the sector," explained Mr Brunt. "Mr Rose’s measured approach tended to result in a nicely balanced portfolio, and the focus on valuations and fundamentals has helped keep the fund comfortably ahead of its benchmark. We will meet with Mr Taketsume in the coming weeks to better understand how the fund will be managed in the future. Until then, we are placing the fund under review."
Gill Hutchinson, research director at The Adviser Centre, said: “There are no plans to change the [fund's] investment philosophy or process, which rely heavily upon Schroder’s extensive internal research capability. However, we would like to take time to monitor the fund’s progress under a different management team.”
But other analysts were more positive because Mr Taketsume has worked alongside Mr Rose and developed portfolio construction skills, and will be working with the same analysts that produce the shortlist of 300 companies Mr Rose uses.
Simon Elliot, head of research at broker Winterflood, said: “The team‐based approach is likely to mean that there will be no fundamental change to portfolio management. Masaki Taketsume has worked with Andrew Rose directly for some time and we view that as a positive. The team remains very well resourced with the Tokyo‐based research team an obvious asset.”
