SAESX and How It Has Changed in 2016



SAESX: An overview

The SunAmerica Japan Fund – Class A (SAESX) seeks “long-term capital appreciation by actively trading securities of Japanese companies and other investments that are tied economically to Japan.”

The fund management intends to buy “misunderstood securities” when Market reaction seems overdone and the general sentiment is negative. It intends to sell those securities for which sentiment and news flows have become overly positive. The fund’s management uses valuation and behavioral finance tools to narrow down those companies that are mispriced, overlooked, or misunderstood due to irrational behavior or Market sentiment.

The fund’s portfolio was comprised of 50 stocks as of April 2016 and was managing assets worth $37 million. As of the March portfolio, its equity holdings included Takeda Pharmaceutical (TKPYY), Sony (SNE), Tokio Marine Holdings (TKOMY), Hitachi (HTHIY), and Nintendo (NTDOY).

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Portfolio changes in SAESX

Consumer discretionary, information technology, and telecom services form the core of SAESX. Combined, these three form 55% of the fund’s portfolio. Industrials and financials make up a tenth each of the portfolio pie. The fund isn’t invested in the utilities sector.

Some sectors comprising SAESX have undergone a change in the one-year period until April 2016. Financials, which formed more than a quarter of the assets a year ago, now forms only a tenth. Industrials also forms less of the assets than it did a year ago. Exposure to industrials fell below 5% intra-period. However, it’s now up to a tenth of the portfolio, although still lower than a year ago.

The sharp decrease in financials has resulted in higher portfolio weights for healthcare, information technology, and telecom services stocks. Among consumer-oriented sectors, exposure to consumer staples has been sharply increased. Exposure to discretionary stocks has declined a little.

A vital aspect to note about SAESX is its extremely high portfolio turnover. Except for energy, the fund manager has experimented with several stocks across sectors with very few stocks seen consistently among its holdings.

In the next article, let’s look at how SAESX has performed in the first four months of 2016.


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