Fund Objective

The Fund aims to achieve capital growth.

View on Past Performance

The broad-based Topix Small Cap Index fell by 12.4% in September. The JASDAQ Index lost 9.8%, while the speculative Mothers Index fell by 13.4%. By comparison, the Topix Index, which measures the whole stock market, lost 12.6%.Japanese small-cap companies have little, if any, direct exposure to the US sub-prime mortgage crisis. However, the extreme turbulence that has rocked global financial markets will inevitably affect global growth. Many small-cap companies are machinery or electronics exporters or supply parts to larger exporters.Defensive sectors such as telecoms are underrepresented in small-cap indices and it is thus pleasing that small caps did not underperform their large-cap counterparts. However, valuations among small caps are lower than those among large caps.

Future Expectations

Valuations in the sector are extremely attractive. Given the higher risk profile normally attributed to small-cap stocks and the economic sensitivity of these companies, they are unlikely to make significant progress in the current global environment. However, given the attractive relative valuation of small-cap companies, we would not expect them to underperform large caps in any rally.

Fund Details