Description: SPARX Japan equity long short strategy targets to deliver capital appreciation through generating absolute return. The strategy will seek to achieve the investment objective by identifying and acquiring undervalued Japanese equities, or short selling overvalued equities.

• Longs: Focused with a mid- to long-term investment time horizon
  • - 20-40 names with 2-3 years investment horizon to capture exceptional growth
• Shorts: Unique individual short ideas
  • - 40-60 names with 6-12 months investment horizon
  • - Invest tactically in single name shorts that generate alpha coupled with the aim to reduce overall volatility of the portfolio with tail-risk hedging (futures and put options)

Leveraging SPARX Research Platform, the team aims to identify opportunity sets that may be neglected by long only portfolio.

Stocks that are fundamentally undervalued and neglected by the market would be considered candidates for long candidates and expensive and overhyped stocks would be considered short candidates.

However, after accumulating over 30 years' worth of research, undervalued and neglected stocks can also be short candidates; and relatively overvalued and popular name can still be long candidates as described below. This new perspective of opportunities shall be only made available by SPARX fundamental research ability which highlights through research to build a deep understanding of companies.

SPARX Japan Equity Long Short team aim to identify opportunities fundamentally to achieve risk adjusted absolute return. Stock selection for both long and short books follow fundamental bottom-up approach.

Function of Short Positions

The purpose of taking short positions is to seek for generating alpha through unjustifiably overvalued companies. However, depending on the market condition, short selling of derivatives may be utilized for hedging.

Key Features:

• Longest track record amongst Japanese equity long short strategies and managers
• Ability to provide consistent return and risk profile
• Typical Exposure Levels:
  • - Long ~80%, Short ~50%
  • - Net: 30%, Gross: 130%
• Number of names:
  • - Long: 20-40 names
  • - Short: 40-60 names

• Note: The above are for illustrative purposes only and should not be relied upon when making investment decisions. The above may not be applicable to all investment cases.
• Source: SPARX Asset Management Co., Ltd.