Key Morningstar Metrics for abrdn Japanese Equity Fund
- : NeutralMorningstar Medalist Rating
- : Above AverageProcess Pillar
- : AveragePeople Pillar
- : AverageParent Pillar
Recent team changes warrant monitoring, although the quality-focused investment approach remains intact. We reaffirm the strategy’s People and Process Pillar ratings at Average and Above Average, respectively.
The departure of long-standing pod lead and team head Chern Yeh Kwok in March 2025 marked a meaningful transition for the Japan equities team. Kwok had helmed the strategy and team since 2011, and his exit represents a loss of deep experience. However, the appointment of Hisashi Arakawa as team head and pod lead is a natural succession, given his strong familiarity with the strategy and close collaboration with Kwok over the years. Arakawa joined the team in 2016 as a small-cap portfolio manager, was promoted to deputy head in 2020, and has been a member of this pod since 2022. With 17 years of industry experience, we regard Arakawa as a knowledgeable and thoughtful investor who shows promise. Vishal Soam, who joined the pod in 2022, remains in a supporting role but is well aligned with Arakawa, contributing to team cohesion.
While two additional analyst departures since 2024 have left the broader team lean at four members, a veteran hire in early 2025 helps offset some of the lost depth. Importantly, the team remains highly experienced. That said, with each analyst now covering more stocks and Arakawa’s expanded responsibilities, their overall workload is a watchpoint.
The strategy continues to apply its long-hold, bottom-up investment approach that focuses on quality companies. Here, Arakawa and Soam place particular emphasis on management quality. They also pay attention to stock valuations. The resulting portfolio has consistently maintained a higher-quality profile than the prospectus benchmark MSCI Japan Index and is broadly in line with the category index Morningstar Japan Growth Target Market Exposure Index.
Despite a challenging market backdrop for quality-growth styles in recent years, the strategy’s execution has remained aligned with its philosophy. Since Arakawa became involved in January 2022 through August 2025, performance has been relatively resilient versus growth peers and outpaced the category index on both an absolute and risk-adjusted basis.
abrdn Japanese Equity Fund: Performance Highlights
The strategy’s quality-growth investment approach has delivered solid results since January 2022, when Hisashi Arakawa joined the pod. During his tenure through August 2025, performance has held up relatively well versus category peers within the Japan large-cap growth equity Morningstar Category and outpaced the category index, Morningstar Japan Growth Target Market Exposure Index, on both an absolute and risk-adjusted basis. However, the strategy trailed its prospectus benchmark, the MSCI Japan Index, partly reflecting persistent stylistic headwinds over the period.
With a bottom-up focused approach, stock selection is expected to drive the strategy’s performance. Indeed, stock selection can at times overcome stylistic headwinds, as seen by strong results over the one-year period to August 2025. Besides comfortably outpacing the category index, the strategy also outperformed the prospectus benchmark by a sizable margin—an outcome that stands out given continued style-related challenges. Gains were led by positions in consumer discretionary and information technology. A consumer discretionary highlight includes the initiation of Ryohin Keikaku. In information technology, overweight exposure to NEC Corp and the initiation of chipmaker Kioxia Holdings also contributed. In contrast, industrials were a drag, with the exclusion of Mitsubishi Heavy Industries due to ESG and an overweight in Misumi Group detracting.
