According to UBP’s qualitative and quantitative research, Japanese companies show a strong correlation between stockmarket performance and the quality of their governance. Furthermore, since 2014, a raft of reforms designed to reinforce governance at Japanese companies has created many opportunities for companies that best adapt to regulatory developments as opposed to those that have difficulties doing so. The new strategy will therefore focus on Japan’s 500 largest stocks, taking long positions on 25-35 well governed companies and short positions on 50-70 poorly governed companies. Important governance metrics include a company’s board structure, shareholder alignment, and strong oversight by independent directors. With governance as the primary stock-picking criterion, the strategy will take into account each company’s fundamentals and valuation when making the final selection. Zuhair Khan, a portfolio manager based in UBP’s Tokyo office, will ensure its management.
Commenting on the launch, Nicolas Faller, Co-CEO Asset Management at UBP, said:
“This new strategy illustrates UBP’s strong belief in the importance of responsible investing. It bears testament to the Bank’s commitment to developing an offering that applies environmental, social and governance criteria. It is also an opportunity to continue expanding our footprint in Asia, especially in our Japan office, with an alternative strategy managed directly in-house.”
Zuhair Khan, lead Portfolio Manager at UBP, said:
“Governance is key, and ESG investing is growing in importance among all types of investors across the globe. We believe that in Japan, companies with good or improving governance also have a greater chance of achieving best-in-class standards in the social and environmental dimensions.”