In 2005, after four years of investing successfully in Japanese equity-related securities, Oaktree created a strategy dedicated to equities and other types of investments there. We believe opportunities exist because of inefficiencies in valuations in Japan's capital markets and emerging trends in the country's economic structure.

These include a stagnant stock market that has made relatively little progress over the past 17 years, healthier banks facilitating a nascent expansion of credit, broader participation by investors as equity shareholders, and increasing M&A activity fueled by attractive valuations and reduced barriers to entry.

"The lower quantity and quality of equity research in Japan suggests opportunities will be overlooked," says portfolio manager Richard Masson. "As always, however, we temper our enthusiasm by placing the highest priority on risk management."

Our approach is bottom-up, with top-down risk monitoring. We focus primarily on small and mid-cap companies, depending on market conditions, looking for solid businesses at attractive prices and companies that are overlooked or misunderstood. As opportunities arise, we are able to invest in other types of securities, including debt securities, loans and derivatives and take short positions.

Investment professionals in Los Angeles and New York work closely with a highly experienced advisory team located in Tokyo.

Click here for information regarding risk disclosures associated with the strategy.