The latest news in investment offerings, financial products and other services relative to wealth advisors and their clients.

Sumitomo Mitsui DS Asset Management
Japan’s Sumitomo Mitsui DS Asset Management (SMDAM) has just launched its Luxembourg-domiciled SMD-AM Japan Mid Small Cap Value UCITS Fund.

The fund, designed to deliver an attractive return versus the benchmark by investing in undervalued Japanese companies, is categorised under the EU’s Sustainable Finance Disclosure Regulation (SFDR) as an Article 6 fund.

The firm, which has run an identical strategy for Japanese investors since 2016, has launched the fund in response to demand from investors in the UK and across Europe.

It will be managed by Kazuhiro Bena, a Tokyo-based portfolio manager, who joined the firm in 2006. He is a bottom-up stock picker who uses artificial intelligence as an integral part of the stock selection process. He also engages proactively with companies to improve shareholder returns, a practice that the Tokyo stock exchange has increasingly focused on.

Bena, the lead portfolio manager since inception of the strategy in 2016, tries to exploit market inefficiencies and mispricing in addition to engaging with holdings to improve their corporate value. By focusing on price to book ratio and return on equity (ROE), Bena aims to outperform traditional value strategies over the long term, as opposed to exploiting short-term valuation anomalies. “We are generating alpha through stock selection alone, and we believe that identifying undervalued mid-small stocks with potential positive changes in future ROE is the optimal investment approach,” he said.   

“Over the last year we have seen strong demand for funds that invest in the mid and small-cap space in Japan. We are excited to bring this highly successful strategy to our clients in the UK and Europe and strongly believe that our local presence, expertise and experience will benefit our clients,” Richard Haxe, managing director of sales and marketing at SMDAM. 

SMDAM has been managing active Japan equity mandates since its establishment in 1973. Since then, the firm has diversified its product offering, working across a broad range of asset classes including Japan equity and fixed income, Asian equity, global equity. It manages $127 billion. 

Lennertz & Co
Germany’s owner-managed family office Lennertz & Co has launched Blockchain Fund III, which invests in companies that build and develop the blockchain infrastructure, targeting about €150 million ($165 million).

This approach differentiates the fund of funds' investment strategy from other investments that are currently focused on cryptocurrencies, the firm said in a statement.

The family office launched one of the world's first blockchain venture fund of funds in 2020, followed by Blockchain Fund II in 2022. 

Both these predecessor funds currently show an IRR (internal rate of return) above the target return of 35 per cent annually, the firm continued. This performance stems from the increased valuations of the invested funds, some of which have grown by a factor of more than 10 since the start of investments 3 to 4 years ago. Lennertz expects similar returns for the newly-launched Blockchain Fund III. Like its predecessors, it will invest in eight to 10 blockchain-focused venture capital funds in Europe and especially in the US.

"In addition to artificial intelligence, defence and security, and impact investing – blockchain technology is one of the most attractive investment themes for the coming decades, and will dominate both the economy and society," Philipp Lennertz, managing partner at Lennertz & Co, said.

Blockchain technology forms the foundation for the emergence of Web 3.0, a decentralised peer-to-peer network. In contrast, Web 2.0 is dominated by large online platforms that act as intermediaries, amassing vast amounts of data, which is the source of their market power.

At the core of the Web 3.0 infrastructure are topics such as security, decentralisation, consensus mechanisms, and scalability. "Blockchain technology has the potential to become relevant to every industry and to disruptively change it. Many companies have already recognised this and are working on blockchain applications for their industries," Lennertz added.