Multi-managerSep 10 2015

Ryan Hughes ramps up Japan weighting

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Ryan Hughes ramps up Japan weighting

Ryan Hughes, multi-manager at Apollo Multi Asset Management, has ramped up his Japanese exposure to its highest level ever.

Mr Hughes now holds 16 per cent of his Apollo Multi Asset Balanced fund in Japan, up from 10 per cent last year.

He has sought to gain exposure to Hideo Shiozumi, manager of the Legg Mason IF Japan Equity fund, who has returned to form. Mr Shiozumi’s £304m vehicle is a high-beta portfolio that tends to do well when Japan’s main indices prosper.

Mr Hughes also likes the Coupland Cardiff Japan Alpha fund, run by Jonathan Dobson. The fund is the manager’s third-largest holding, making up 7.1 per cent of his £33m Apollo portfolio.

But Mr Hughes has opted to switch out of one actively managed Japan portfolio in favour of a tracker. He has sold out of the Neptune Japan Opportunities fund and switched into an exchange-traded fund (ETF) exposed to the JPX-Nikkei 400 index.

The manager explained: “Neptune was giving us some exposure that we already had, and the ETF was a purer play. We wanted exposure to that index.”

The JPX-Nikkei 400 was created in January 2014 as a reflection of government-led efforts to improve Japanese companies’ corporate governance. A strategic beta index, it screens companies according to their profitability, returns to shareholders and superior corporate governance.

Mr Hughes thinks the index’s prestige is successfully putting pressure on companies to reform in order to gain inclusion. He predicts Japan is “going through what Europe went through in the 1990s, with a similar increase in returns of the companies in that period”.

Elsewhere, the manager is “significantly underweight” the UK, a position he has held all year and one he thinks “played out well” for his own portfolio.

“We saw headwinds coming from China and that’s exactly what we’ve seen [play out] – the FTSE fall back,” Mr Hughes said.

The FTSE 100 index has dropped 5 per cent year to date as of the end of August. Mr Hughes has made money from the fall as he holds a short position on the index.

Another underweight in Mr Hughes’s portfolio is in fixed income, which makes up just 8.4 per cent of his holdings. The bond funds he does have are “positioned to do well regardless of where rates go”, he added.

He holds the offshore JPMorgan Income Opportunity fund, run by Bill Eigen, and Azhar Hussain’s Royal London Short Duration Global High Yield Bond fund.

On a one-year view Mr Hughes’s fund has returned 1.8 per cent to the end of August, according to FE Analytics figures. Year to date the fund, which sits in the IA Unclassified sector, has returned 0.9 per cent.