SOPHIA (Core-Growth)

Investment Philosophy

Finding ROE Growth From Structural Changes

Markets evaluate stock prices on the basis of future cash generating potential: companies considered capable of achieving a high growth rate may be valued higher than low growth companies. Generally, such future expectations are an extension of past profitability trends, so the valuation of a company remains within a certain range.

In the event that a company achieves a different profitability trend from the market prediction, the stock price valuation level changes. SOPHIA invests in companies that are likely to be revalued, or found to be improving in terms of profitability, identified by positive ROE growth momentum. The strategy aims to capture alpha from ROE growth, which we identify from economic, industrial, and corporate structural changes.


SOPHIA focuses its growth potentials within two financial terms. SOPHIA focuses on:

Valuation Correction = VERTICAL CHANGE

As of Sep. 30, 2020
Sources: Bloomberg; compiled by TDAM
Data of TOPIX component stocks with P/B between 0x and 10x and ROE between 0% and 40%.

Investment Process


Create the Investment Universe of approximately 600 stocks through three sources; 1) quantitative screening, 2) analyst team research and Core Stocks (market cap over JPY 1 tril.) and 3) fund manager research


Weekly checklists are created to facilitate efficient idea generation, and portfolio stocks are selected after rigorous bottom-up research


  • This page is directed for professional investors only.
  • The purpose of this page is to express the general investment method of the strategy, and not intended for offering or soliciting any new subscriptions.
  • The information contained in this material is prepared based on a representative fund of the strategy.
  • All data used herein are that of the past and do not guarantee future returns.
  • Although the information used on this page has been obtained from public sources which are considered to be reliable and credible, T&D Asset Management does not guarantee the correctness or the credibility of such information.