Changes to the FTF Martin Currie Japan Equity fund

24 October 2024 — There are a number of upcoming changes to the FTF Martin Currie Japan Equity Fund, which will be effective from 17 December 2024. These changes include adjustments to the fund’s investment approach, a shift in management responsibilities, and a name change.

Summary of Changes

• Investment Policy: After the retirement of veteran fund manager Hideo Shiozumi, the new managers initially committed to running the fund in a similar style. However this will now change. The fund will expand its focus beyond small and mid-cap growth companies to a broader selection of Japanese companies of any size and industry. This change allows for a more balanced and style-agnostic approach, placing a greater emphasis on valuation and quality. As a result, around 80% of the portfolio will shift to align with this new strategy.
• Investment Manager: All management responsibilities will transition to Templeton Asset Management Limited (TAML), which has the experience needed to align with this revised strategy. A new team within TAML will oversee the fund’s portfolio going forward.
• Fund Name: Reflecting these changes, the fund will be renamed from FTF Martin Currie Japan Equity Fund to FTF Templeton Japan Equity Fund. This will not impact the fund’s risk profile, and there will be no costs to you as the changes are being funded by Franklin Templeton.

Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.

Chelsea View

Historically, this fund has been known for its high-risk, high-reward focus on smaller growth companies, resulting in periods of both significant gains and steep declines. This upcoming shift to a more diversified, multi-cap approach represents a considerable departure from the fund’s traditional strategy. Investors may wish to consider their holdings in the fund, as the fund will now invest in a very different way to when they first invested.

We question the timing of this move, which comes after small cap growth names have already had a severe period of underperformance as this style has been out of favour. Given these changes, we are issuing a ‘Hold’ for the fund.

Those seeking a fund with a style similar to the original FTF Martin Currie Japan Equity strategy could consider JPM Japan, Baillie Gifford Japanese Smaller Companies and Comgest Growth Japan. These Japanese growth funds have recently underperformed. However, growth managers remain optimistic about the attractive valuations of their stocks and anticipate significantly improved performance if the growth investment style returns to favour.

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.