S&P assigns rating to Tokio Marine Japanese Equity Leaders Fund

Standard & Poor's Fund Services announced today that it has assigned an A (New) fund management rating to the Tokio Marine Japanese Equity Leaders Fund.

Although this fund was launched in March 2010, the Japanese Equity Leaders strategy has been running since 2006, initially as an unconstrained mandate and then from February 2007 in a Japan-domiciled fund with similar constraints as this Irish Ucits fund.

The fund differs from most other funds in that the primary alpha source is a focus on environmental, social, governance and risk management (ESGR) factors. The fund aims to outperform the TOPIX total return by 3% a year over a cycle. The tracking error budget is 2-7% (typically around 3.5-4%), with most of the budget used for stock selection.

The team involved in the fund includes four analysts working at Tokio Marine & Nichido Risk Consulting who undertake ESGR analysis on the entire universe of listed Japanese equities. The best stocks in each sector are then subjected to further fundamental and financial analysis by the Tokio Marine AM research team of 14, who rate stocks using a primarily Garp approach. Fund manager Kenichi Kubo blends the ESGR research and financial research with a macroeconomic overlay he formulates in his dual role as strategist. This enables him to tilt the portfolio beta and to go down the market capitalisation scale when appropriate.

Cumulatively, the Leaders strategy has slightly outperformed the TOPIX benchmark since 2006 (gross) and has also outperformed the peer group.

"The ESGR process appears effective and, combined with appropriate resources at Tokio Marine & Nichido Risk Consulting and Tokio Marine AM, enables the fund to achieve an S&P A (New) fund rating," said Guy Boden, lead analyst, S&P Fund Services.

"ESGR evaluation is still a fairly unique concept in Japan," said fund manager Kenichi Kubo. "I believe ESGR is an innovative tool to use in active Japanese equity strategies, and I look forward to sharing our views on ESGR with investors."