T. Rowe Price (TRP has announced the introduction of its emerging markets discovery equity strategy to Japan as a public ITM (investment trust fund), through a new distribution partnership with Mitsubishi UFJ Morgan Stanley Securities.

The actively managed strategy invests in a diversified portfolio of emerging-market companies. Its approach focuses on identifying overlooked stocks that the investment team believes are under-owned and under-researched by mainstream investors, and where it sees the potential for positive fundamental change, according to a statement by the US asset manager.

The introduction expands the range of TRP’s active investment capabilities available to Japanese investors and marks the firm’s first distribution partnership with Mitsubishi UFJ Morgan Stanley Securities.

Naoyuki Honda, country head of T. Rowe Price Japan, said: “We are pleased to join forces with Mitsubishi UFJ Morgan Stanley Securities for the first time to offer a differentiated emerging markets strategy to Japanese investors.”

“It has a strong focus on providing portfolio solutions that support clients’ long-term wealth objectives, and we believe this partnership will broaden the range of investment opportunities available to its clients. Emerging markets provide a source of diversification for Japanese investors looking beyond domestic and US assets.”

Emerging markets account for more than 70% of global economic growth, according to Bloomberg, but investor attention is often concentrated on a relatively small group of large, widely held companies, leaving many less-followed businesses overlooked and their long-term prospects potentially underappreciated.

The T. Rowe Price emerging markets discovery equity strategy seeks to capitalise on these market inefficiencies through fundamental, bottom-up research, said TRP. Rather than concentrating only on established market leaders, the investment team looks for under-owned and under-researched companies where improving business prospects may not yet be fully reflected in valuations.

Ernest Yeung, portfolio manager of the T. Rowe Price emerging markets discovery equity Strategy, said: “As contrarian investors, we look to identify overlooked companies where we see potential for positive fundamental change. Our long-term investment horizon allows us to look beyond near-term uncertainty and assess whether improving competitive positions, management actions or industry conditions could produce a more favourable outcome than the market anticipates.” 

In Japan, TRP has maintained a presence since 1982 and established a locally incorporated business in April 2018.