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The Epitome of Active Investing


THE EPITOME OF ACTIVE INVESTING

Ernst Glanzmann

Ernst Glanzmann
Lead Manager of Japan Strategies
GAM

It is no mean feat that GAM has consistently fared well and stayed ahead of the pack – much of its success is attributable to its steadfast commitment to active investing principles, which has earned GAM this year’s Top Mutual Fund Award in Japan Large-Cap Equity. We sat down with Ernst Glanzmann, Lead Manager of Japan Strategies, to talk about the asset manager’s investment philosophy and insights on the Japanese market.

BENCHMARK (BM): Congratulations! Your fund has consistently outperformed the benchmark and peers! Could you share with us your investment philosophy and your stock selection approach?
Ernst Glanzmann (EG): Thank you. Our investment approach is based on the belief that a scarce number of leading firms deliver superior portfolio returns over a longer holding period if purchased for good value. Essentially, we select leading businesses with sustainable, superior long-term growth; high return on equity; low leverage; and low capital intensity. Our portfolio is concentrated, typically comprising 20–30 positions with equal weightings. The annual rebalancing of weights over a period of 12 months is executed in June each year.
BM: Japan’s macro picture is turning sanguine – international demand for Japanese high-tech electronics remains strong, monetary policy remains accommodative, PMI hovers at multi-year highs, and the unemployment rate has hit a 25-year low. Against this backdrop, which sectors could benefit the most, and how do you position to seize these opportunities?
EG: Yes, I agree that Japan’s macro backdrop is favorable, and therefore we remain positive on Japan equities. During the last five years, net profits of TOPIX constituent stocks have grown, on average, 18% annually, while the index has risen 16% per annum. With both the domestic and global economy sustaining a positive momentum, investors were reluctant to pay a premium for this kind of growth. Consequently, the trailing price-to-earnings ratio remains attractive, at around 14 to 17 times.
At the end of 2017, the largest absolute and relative exposure was to industrials, followed by consumer discretionary. Japan’s small business survey, published by the Shoku Chukin Bank, and the leading diffusion index, calculated by the Cabinet Office, both remain at levels that indicate continued expansion. In addition, orders for machinery and building factories show firm growth, not least due to the further tightening of supply over demand within key industries such as electronic components and semiconductors. Increasingly, companies are announcing plans to build new plants in Japan – for the first time in more than 20 years, in some cases.
Information technology is another sector we are paying attention to. The ever-tighter labor market is driving demand for work process improvement, yet firms are eager to contain cost pressure as much as possible. One way to achieve both is by further standardizing processes through the application of IT based solutions – automation, robotics, artificial intelligence, the Internet of things, etc. The digitalization of operations is expected to promote healthy, sustainable growth in the industry.
BM: Stepping into 2018, what issues and potentials are you looking out for?
EG: I believe that investors are still wary for a number of reasons – central bank policies, for one, have been a continuous source of uncertainty, while external events such as Brexit, the Chinese economy, and geopolitical issues, such as North Korea’s nuclear ambitions, have further distracted investors from Japanese listed firms.
Valuations for Japanese equities are currently fairly attractive. Looking forward, we expect to see steady annual earnings growth at around 10%, as firms are committed to profitability and the efficiency enhancement of production lines and supply chains, driven by the current labor shortage. Meanwhile, price hikes and industry consolidation are likely to offset the rising labor costs and bode well for the Japan equity market. BM

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主動式投資的典範

Ernst Glanzmann

日本策略首席基金經理
Ernst Glanzmann
GAM

GAM的基金長期表現出眾、傲視同儕,是無庸置疑的事實。GAM團隊堅守主動投資原則,是該公司能夠取得成功的重要因素。今年,GAM榮獲《指標》的日本大型股票組別中最佳表現基金獎。我們特別邀請到他們的日本策略首席基金經理Ernst Glanzmann,與我們分享投資理念以及有關投資日本市場的灼見。

《指標》: 首先恭喜你!我們都很想知道,你的投資理念和選股方法有何獨特之處,令基金能夠持續跑贏基準和同儕?
Ernst Glanzmann (EG):謝謝你的提問。我們的投資方式建基於一種信念:市場上有少數具領導地位的公司,如果我們能以良好的價格買入並長期持有,便能爭取卓越的投資組合回報。具體來說,我們偏好長綫及持續增長出色、股本回報率高、槓桿率低和資本密度低的領頭羊公司。我們的投資組合非常集中,通常持有20 至30 隻權重相同等的股票。我們會每12 個月為投資組合作資產配置,一般於每年6 月進行。
《指標》: 日本的宏觀情況轉趨樂觀——環球市場對日本高科技電子產品需求繼續強勁、其貨幣政策保持寬鬆、PMI徘徊在多年高位、失業率則創下25 年新低。在這種背景下,哪些行業最為受益?你會如何把握這些機遇?
EG:我同意日本的宏觀因素向好,正因如此,我們對日本股市保持樂觀態度。過去5 年,東證成份股的淨利潤平均每年增長18%,而該指數則每年上升16%。由於當地和環球經濟的正面勢頭持續,投資者不願為這種增長支付溢價,因此令日本股市的尾隨市盈率繼續維持在14倍至17倍左右的吸引水平。
在2017年底,投資組合持有最多的是工業股,其次是非消費必需品股。據日本商工中金銀行(Shoku Chukin Bank)的日本小型企業調查和日本政府公佈的領先指標擴散指數(diffusion index)顯示,兩個行業均在持續擴張的水平。此外,機械和建築工廠的訂單顯示強勁增長,其中如電子元件和半導體等主要行業更明顯供不應求。同樣值得一提的是,愈來愈多的公司宣佈計劃在日本建造新廠房,這是20多年來首次發生的現象。
信息科技是另一個我們關注的行業。日本勞動力市場不斷萎縮,促使企業不得不優化工作流程。但另一方面,企業當然希望盡力遏制成本壓力。其中一種做法,就是通過應用基於信息科技的解決方案——包括自動化、機器人技術、人工智能、物聯網等——將工作流程進一步標準化。我們相信營運數碼化將為信息科技行業帶來健康及可持續增長。
《指標》: 踏入2018 年,你認為市場有哪些風險和機遇是投資者需要留意的?
EG:我認為市場還有多項風險存在——央行政策繼續是其中一個不確定性的來源,而外部事件如英國脫歐、中國經濟動向、以及朝鮮核武野心等地緣政治問題,都可能分散日本股市投資者的注意力。
目前日本股票的估值頗具吸引力。展望未來,在日本企業致力於實現盈利、勞動力短缺將促使企業提升生產線和供應鏈效率的背景下,我們預期日本企業每年的盈利增長將保持在約10%水平。與此同時,價格上升和行業整合應能抵銷勞動力成本上漲的影響,對日本股市有利。BM

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