Man Japan CoreAlpha Profl Acc C
Why is this fund on our radar?
Man Japan CoreAlpha invests in large Japanese companies which are cheap and out of favour with investors. Lead manager Jeff Atherton and his team invest in companies trading less than they believe the underlying assets are worth, in order to benefit as they move back toward their fair value over time. Whilst the managers are mindful of local market benchmarks for performance comparisons, these play no role in portfolio construction. Stock selection is purely based on company specifics, meaning the portfolio can look very different from peers’.
The investable universe spans Japan’s largest 300 companies, with the team targeting businesses with strong fundamentals, stable market positions and low valuations, often in out-of-favour or overlooked sectors. This is not a strategy that buys ‘cheap’ companies for the sake of it. Since becoming lead manager in 2021, Jeff has refined the process, placing greater emphasis on resilient earnings and visible catalysts for change, such as improved governance or management performance. These refinements have reduced concentration in the top holdings and lowered the risk of falling into value traps, or buying companies that are cheap for a good reason. Though still stylistically bold and firmly contrarian, today’s portfolio is more diversified and risk-aware.
The result is a high-conviction, benchmark-agnostic strategy that has made it onto our list thanks to its record of generating outperformance whilst not behaving much like the market. Its slightly lower batting average, meaning the percentage of periods it outperformed the market, reflects the manager’s willingness to back contrarian areas, an approach that has been rewarded over the past five years. We think CoreAlpha may appeal to investors seeking active exposure to Japan, with lower-correlated access to a developed market undergoing structural transformation.
Skip to Our VerdictPerformance
Since Jeff took the helm in March 2021, CoreAlpha has outperformed its comparators, delivering a total return of 87.5%, compared with 47.2% for the TOPIX and 89.6% for the Russell/Nomura Large Cap Value Index, these last two being Japanese equity indices. Outperformance has been driven by stock-picking, a supportive backdrop for the contrarian style and a modest evolution of the investment process, which has reduced portfolio concentration, avoiding deep-value traps and focussing on resilient earnings without diluting value discipline.
Recent years have been favourable for value investing in Japan, supported by structural changes such as corporate governance reforms, which have boosted capital efficiency and shareholder returns—initially benefitting the cheaper companies in the market which this fund owns. However, the strategy is not immune to underperformance. In 2020, during the pandemic-induced, growth-led rally, CoreAlpha lagged significantly, highlighting its vulnerability when its style is out of favour. This is evident in the ten-year chart below, where performance dips sharply relative to the ETF during the 2020 (denoted by the cumulative returns line).
TEN-year performance
Source: Morningstar
Past performance is not a reliable indicator of future results
CoreAlpha has rebounded strongly since then, delivering significant outperformance, beating the TOPIX and Russell/Nomura Large Cap Value Index over the full five-year period. We think this is impressive, as the latter index has benefitted from the same supportive back drop but has also been lifted in recent years by the deep-value stocks Jeff deliberately avoids due to structural risks.
Portfolio
The portfolio is built from the bottom up, unconstrained by benchmark weights or sector composition, though with a clear bias toward the largest companies. At its heart, the process remains grounded in mean reversion, focussing on materially underperforming stocks with attractive relative valuation ratios.
Whilst CoreAlpha’s heritage has been deep value, Jeff has introduced over time greater emphasis on earnings stability, growth and governance catalysts, strengthening the team’s ability to avoid value traps. This shift has nudged the portfolio away from pure deep-value names toward undervalued but higher-quality opportunities, with more balanced position sizing and reduced concentration in the top ten holdings.
Current positioning shows a tilt towards domestic-facing sectors where valuations look compelling. In real estate, large developers and REITs look mispriced after a sharp de-rating, despite improving macro conditions. With rates unlikely to rise meaningfully and reflation taking hold, the risk/reward outlook looks favourable. Financials ex-banks, also feature, offering value and diversification, with holdings such as SoftBank and Nomura benefitting from restructuring and governance reform that the market has yet to fully price in.
Autos represent another overweight, with high-conviction positions in Nissan and Honda. These economically sensitive exporters remain deeply undervalued, echoing the 2020–21 cycle when poor sentiment and low valuations set the stage for a sharp rerating. That said, tariffs and broader trade tensions could influence near-term volatility, particularly for export-heavy sectors like autos. Technology, meanwhile, remains a structural underweight. Despite some selective exposure, like semiconductor supplier Shin-Etsu Chemical, most tech stocks remain too expensive and index inclusion alone never drives investment decisions.
sector allocation
Source: Man Group
Although CoreAlpha only invests in Japanese companies, it behaves very differently from both its peer funds and the wider Japanese stock market. Its returns don’t closely follow the IA Japan sector of similar funds or the TOPIX index, illustrated in the table below, meaning it moves more in its own direction rather than mirroring the market. Even when compared to a value-focussed index that aligns more with its style, it still shows some independence. This is because the managers are very active and often take a contrarian approach, backing companies that others overlook.
correlation
| investment |
1 |
2 |
3 |
4 |
5 |
| 1 Man Japan CoreAlpha |
1.00 |
||||
| 2 TOPIX TR |
0.73 |
1.00 |
|||
| 3 Russell/Nomura Large Cap Value TR |
0.90 |
0.85 |
1.00 |
||
| 4 iShares MSCI Japan ETF |
0.70 |
0.99 | 0.83 | 1.00 |
|
| 5 IA Japan |
0.68 | 0.98 |
0.79 |
0.97 |
1.00 |
Source: Morningstar, as of 31/10/2025
Our Verdict
Japan’s market has long teased investors with promise, only to fall short. But meaningful corporate reforms and a changing economic environment means there are reasons to consider the country. For investors seeking exposure to a differentiated developed market undergoing a transformation, we think CoreAlpha offers a compelling option.
Jeff follows a disciplined, contrarian approach, targeting large companies trading at depressed valuations often overlooked by the broader market. The strategy is unapologetically value-oriented, rooted in the valuation of assets and cashflows. This naturally steers the portfolio away from expensive sectors, positioning the fund as a complement to many funds which buy expensive, high growth stocks, or as a route to access a revitalising Japanese equity market supported by structural tailwinds.
Underperformance is possible if the style falls out of favour, but today’s market appears more balanced. Wage growth is supporting domestic sectors, rising rates is benefitting most financials and inflation is aiding areas like real estate. This might create scope for active stock-pickers to stand out, an environment well suited to Jeff’s disciplined contrarian style and decades of experience navigating Japan’s market cycles.
Key Risks
- Contrarian, value-driven approach may lag during speculative or growth-led market rallies
- Large-cap focus limits exposure to potentially higher-growth small- and mid-cap companies
- Underweight in technology may result in missing out on Japan’s more innovative or disruptive businesses
