A look at the Japanese stock market and three fund picks:
- iShares Japan Equity Index – low-cost, broad exposure to the Japanese stock market.
- Man GLG Japan CoreAlpha Equity – focused on value investing.
- FSSA Japan Focus – invests in companies that are dominant in their industries.
Q1 2022 hedge fund letters, conferences and more
Josef Licsauer, Investment Analyst, Hargreaves Lansdown:
“Japan is the world’s third largest economy and boasts one of the largest stock markets in the world. It’s also home to some of the best-known companies on the planet, including Toyota, Sony and Honda. There are also lesser-known businesses with the potential to become the household names of tomorrow.
It might be one of the largest stock markets globally, but it can be overlooked by investors - although it’s attractively valued. There are lots of parts of Japan that are misunderstood and under-researched, so there could be some hidden gems of opportunities for investors.”
“This fund aims to match the performance of the FTSE Japan – a broad index of more than 500 companies. It invests in every company in the FTSE Japan Index in order to track the index as closely as possible.
While it invests more in larger companies, it can invest in higher-risk smaller companies too. It also invests in a range of different sectors, including industrials, consumer discretionary, technology and healthcare. It’s a good option for low-cost, broad exposure to the Japanese stock market.”
Man GLG Japan CoreAlpha Equity
“The managers invest in large Japanese companies, that mainly feature on the TOPIX. They invest in companies they feel can be bought at a lower price than their true worth, and sell them when they feel the company and the share price has recovered. It’s a style known as value investing. Remember though, not all of these companies are guaranteed to make a recovery.
Their discipline in this approach sets them apart from their peers. The fund invests in a relatively small number of companies. That means each one can have a significant impact on how the fund does, which adds risk.”
FSSA Japan Focus
“This fund invests in companies that are dominant in their industries, and primarily featured on the TOPIX. The managers believe the strength and quality of the companies they own is what drives returns over the long run.
They tend to invest in relatively few companies which adds risk. Over 70% of the fund is invested in technology, industrials and healthcare companies. This can change over time, depending on where they find what they believe to be the best opportunities.”
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