Liquid Alpha from Japanese Equities

6 Jun 2019

Japan has the world’s third largest economy, third largest stock-market, and over 3,700 listed companies, with trading volumes of USD 4 trillion per year. The liquidity of the stock-market, relative ease of short selling versus some other Asian markets, and dearth of sell side research coverage should make it attractive for hedge fund managers. Yet there is actually much less hedge fund capital devoted to Japanese long/short equity than to US or European long/short equity, as advisory firms such as Sussex Partners have observed in their commentary. The ratio of hedge fund assets to market capitalisation is estimated at about 0.5% in Japan, compared with 6% in the US and 8% in Europe. The number of hedge funds in Japan, at between 80 and 120, is also very small when there are around 10,000 active hedge funds globally, according to eVestment.

Founded over a decade ago under the initiative of Chairman Michel Amsellem, Alpha Japan Asset Advisors Limited (“Alpha Japan”) is an independent firm exclusively focused on Japanese equities, and licensed as a discretionary Investment Manager by Japan’s Ministry of Finance. It has one of the most experienced and cohesive teams of investment professionals who work together in a relatively flat and non-hierarchical structure. Though Asian hedge funds in general have been relatively slow to adopt UCITS, Alpha Japan were amongst the first to set up a UCITS, and manage both Irish and Luxembourg domiciled UCITS. Nomura Investment Solutions PLC – Nomura Alpha Japan Long/Short Fund received The Hedge Fund Journal’s ‘UCITS Hedge’ award for best performing Equity Long/Short (Japan) strategy over two, three, four and five year periods ending in December 2018. It received the same award for spells ending in December 2017…

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