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Hedge Fund Creation Picks Japan Low-ROE Stocks in Trend Snub

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As the Japanese government encourages companies to boost their return on equity to lure investors, Tokyo-based hedge fund Creation Capital Inc. isn’t swayed.

The hedge fund with $22 million under management is instead choosing companies with a low ROE and price-to-book value, said Kenichi Ura, managing director of KU & Associates Co., the adviser for Creation. Companies with low ROE tend to have fewer risks and the biggest room for improvement, he said.