Fees and Compensation — Form ADV Part 2A (6/19/2024)
[Brochure]
Fees and Compensation
NAM’s fee schedule is not included because this brochure will be delivered only to clients that
are “qualified purchasers” as defined in the Investment Company Act of 1940, as amended.
For advisory services provided to clients, NAM charges advisory fees based on a percentage of
the market value of the assets under management. Generally fees are billed and collected
quarterly in arrears.
NAM does not deduct its management fees from clients’ accounts unless otherwise directed by
clients. The fees charged by NAM are in addition to any transaction costs (including brokerage
fees) when buying and selling securities, and custodial fees, and other actual costs (including
any reasonable fees for exercise of the voting rights).
The fees and the payment methods are generally negotiable.
Other than the advisory fees, NAM does not accept any compensation from the clients, nor does
it execute any sale of securities for the clients as broker/dealer.
Performance Based Fees and Side-by-Side Management
Performance-based or incentive fees are fees based on a share of capital gains on or capital
appreciation of the assets of a client, and such fees are subject to negotiation with each client.
NAM does not currently charge a performance-based fee on the US clients.
Account Minimums and Types of Clients — Form ADV Part 2A (6/19/2024)
[Brochure]
Types of Clients
In the U.S., NAM has two clients for whom NAM provides investment advisory services;
however, NAM does not have regulatory assets under management for the U.S. client.
Methods of Analysis, Investment Strategies and Risk of Loss
NAM provides advice with respect to investments mainly focusing on Japanese equity securities.
NAM believes in long-term investing and has established its investment process and teams
accordingly. The philosophy as a long-term investor is deeply rooted in the corporate culture
and is shared and acknowledged among all professionals ranging from portfolio managers to
analysts. Whereas there had been a tendency among most active managers in Japan to only
consider approximately two years of earnings forecast, NAM decided to introduce five years of
earnings forecast in 2003, with full implementation in 2004. NAM has continued to commit
resources to develop all that is necessary to produce and utilize such long-term earnings forecast.
For instance, the decision to integrate Environmental, Social and Corporate Governance
(“ESG”) considerations into the research process in 2008 was one of the initiatives to establish
a robust framework for long-term earnings forecast and NAM believes ESG considerations are
now firmly entrenched into the investment process.
NAM selects Japanese equities through a bottom-up approach based on thorough research as
such, and aims to create portfolios that NAM believes will outperform the Japanese equity
market (TOPIX) in the long-term.
All investments in securities involve a risk of loss and the clients should be prepared to bear the
risk that the investment strategy offered by NAM could lose money over the short or even longer
periods.
There are two material risks involved with respect to the investment in Japanese stocks.
Price fluctuation risk:
As a result of domestic and global economic trends, change in social conditions, industry
trends, performance or expected performance of operations of the issuing company,
assessment of the company by investors, and investment behavior based on such factors,
Japanese stock prices may decrease and investors could suffer a loss which loss may
amount to more than the amount of the invested principal.
Liquidity risk:
There is a risk that Japanese stocks may be illiquid due to (i) the liquidity of the stocks
in the market being significantly lower than the volume of the transaction, (ii)
management or financial condition of the issuing company deteriorates, or (iii) demand
and supply becomes significantly imbalanced due to such deterioration. In addition,
even if such stocks may be exchanged for cash, the price may be unfavorable compared
to the price which was available immediately before such transaction, and as a result,
client may suffer a loss which loss may amount to more than the amount of the invested
principal.
The identification of securities representing high quality businesses and management teams is a
difficult task, and there are no assurances that such opportunities will be successfully recognized
over the long term. While such investments offer the opportunities for above-average capital
appreciation, they also involve a high degree of financial risk and can result in substantial losses.