OP-Japan

OP-Japan serves the needs of investors who wish to diversify their portfolios into the world's third-largest economy. The diversification benefit is remarkable, since stock price trends in the Japanese market differ from European and North American trends. This fund is mainly recommended to an investor who intends to redeem his/her units after seven years at the earliest.

The TOPIX declined in June 2022, posting -2.2% in JPY terms, on the back of concerns over high inflation, further tightening, and concerns over recession in US and Europe. Governor Kuroda, on the other hand, confirmed dovish stance at press conference mid-June. JPY declined further over the month with USD/JPY moving to 136, hitting 24-year low.

Over the month, 15 of the 33 Topix sectors rose and 18 fell. Despite of declining JPY, top performing sectors were defensive sectors such as electric power & gas, fishery, agriculture & forestry, textiles & apparels and foods. Worst performing sectors were marine transportation, mining, steel, electric appliances and precision instruments sectors. From factor perspective, low beta value stocks outperformed and quality stocks with higher ROE were sold.

The portfolio posted an underperformance over the month. Both stock selection and sector allocation detracted value. At the sector level, overweighting the electric appliances and precision instruments detracted value most. Overweighting the insurance sector, on the other hand, added value.

At the individual stock level, many of our high conviction overweight positions in quality names such as, Tokyo Electron, Shin-Etsu Chemical, Hoya and Keyence declined and detracted value as they suffered from continuing quality sell off. All five of the main detractors are Premium and Quality rated and there was no major shift in the fundamentals. There continues to be a shift in what valuation the market ascribes to these businesses. Business results and business momentum of the above mentioned companies have continued to be strong. Our overweight positions in Tokio Marine (non-life insurance), Asics (running shoes), and Fast Retailing (apparel), on the other hand, outperformed and added value.

OP-Japan (Fund) is an equity fund which mainly invests its assets in the Japanese equity market. Its investments are mainly made in Japanese yens, which is why the Fund involves a major currency risk.

The Fund mainly invests directly in equities. In its investment operations, the Fund may use derivative instruments in order to hedge against the risk of adverse market and currency movements, to replace direct investments and to promote otherwise effective portfolio management.

The Fund’s equity market exposure may vary between 75% and 105% of the Fund’s value. The equity exposure typically varies between 90% and 100%.

The Fund invests broadly across various companies. The Fund typically invests in equities of about 50–80 companies but this number may vary depending on the portfolio manager’s view.

The Fund’s benchmark index is TOPIX TR. With active investing, the Fund seeks to outperform its benchmark index in the long term. The Fund mainly takes high active risk and may differ very significantly from the composition, weights and risk level of the benchmark index.

The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments. 

Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful.  The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.

Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.  

Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.

Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data. 

Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.

Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.

• Sustainability-related disclosures >

As our owner-customer, saving and investing is especially worthwhile thanks to the excellent benefits you receive.

Your benefits when investing in funds:

• Buy and sell almost all OP mutual funds with no fees.*
• You earn 0.35% OP bonuses from mutual fund and insurance assets.** 

Your benefits when investing through insurance: 

• Begin saving through insurance free of charge. 
• You will earn 0.35% of OP bonuses from funds linked to insurance assets.***
• Switch between investments, invest additional funds and change your payment and investment plan for OP Unit-linked Insurance and OP Capital Redemption Contract free of charge in our digital services.  

**OP bonuses are used to pay the bank’s service charges and insurance premiums.

***You earn OP bonuses from unit-linked insurance policies, excluding individual unit-linked insurance policies and Individual Capital Redemption Contracts. The principles of contribution towards OP bonuses from funds linked to insurance assets will be harmonised with direct investments. As of 1 January 2025, the following funds linked to insurance assets will no longer contribute towards OP bonuses: third-party funds such as JP Morgan funds, structured loans and institutional class funds such as OP-World III A.

Your benefits in equity and ETF investing:

• Open an equity savings account or book-entry account free of charge.
• You get a discount on equity trading and a 1% fee ceiling when trading in Finnish listed companies through a book-entry account The discounts apply in digital services.
• Get access to free stock picks and analysis.
• Get a discount on the service packages for savers and investors:
  Equity savings account: 
  Saver: €0/month (normally €2.99/month)
  Investor: €9.99/month (normally €14.99/month)
  Book-entry account: 
  Saver: €0/month (normally €2.99/month)
  Investor: €0/month (normally €5.39/month)

Other benefits:

• Only owner-customers can invest in Profit Shares.

Remember to make use of all benefits:

Income unit generating annual cash flow, suitable for foundations

The fund’s unit class III A with a minimum subscription of 1 000,000 euros