Posted inHead To Head

HEAD-TO-HEAD: AB vs Nomura

FSA compares two large-cap Japan equity products: the AB FCP I - Japan Strategic Value Portfolio Fund and the Nomura Japan Strategic Fund.
by Francis Nikolai Acosta
Investment strategy

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Both funds invest the majority of their assets in large-cap stocks.

The funds employ quantitative screen filters and look for value-oriented names, according to Yew. He noted, however, that the AB fund’s portfolio is more value-oriented while Nomura’s would sit between value and growth. Both funds use the Topix index as their benchmark.

While the investment process is similar for both funds, the main difference between them is the number of names they hold in their portfolios.

The AB fund has a concentrated portfolio of just around 40-50 stocks, while the Nomura fund is more diversified with 150-200 stocks, according to Yew.

In addition, the AB fund does not invest in small-cap stocks, while the Nomura fund does. The Nomura fund manager believes that the fund could capture some opportunities from small-caps since they have been flying under the radar in Japan, according to Yew.

Asset allocation by market cap (%)

Market cap

AB

Nomura

Category
Giant/large

78.3

68

81.3
Mid

21.7

26.3

16.6
Small/micro

0

5.7

5.3
Source: Morningstar

There are also some differences in sector allocation. For example, the AB fund has a higher weighting in technology, while the Nomura fund is overweight in basic materials.

The differences in sector allocations are not a result of a top-down process, but derive from the bottom-up stock selection of both managers of the fund, Yew said.

Sector allocation (%)

Equity sectors

AB

Nomura

Category
Defensive

10.4

7.4

14.3
Consumer defensive

5.1

2.8

7.3
Healthcare

3.9

4.2

5.5
Utilities

1.5

0.4

1.5
Sensitive

47.4

45

41.7
Communication services

6.3

4.3

4.8
Energy

3.3

3.1

2
Industrials

12.8

17.1

18.9
Technology

25.1

20.5

16
Cyclical

42.1

47.6

44
Basic materials

9.6

12.6

8.3
Consumer cyclical

18.1

19.3

18
Financial services

11.9

10.7

13.8
Real estate

2.6

5

3.9
Source: Morningstar

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