Investments  

Nikko banks on Japanese equity bounce with Watanabe at helm

Nikko Asset Management has expanded its range of Ucits products with the launch of a new fund which invests in Japanese equities.

The Japan Focus Equity fund targets long-term capital growth by investing in a portfolio of more than 30 stocks.

It is based on the asset manager’s existing strategy domiciled in Japan which as of March 31 this year has returned 26.15 per cent annually since September 2012, compared with an annualised 21.24 percent rise in the Topix Total Return Index, according to the investment firm.

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The fund has been managed by Yuki Watanabe since August 2012. He has been tasked to head up the new proposition with the support of Nikko’s investment team which boasts approximately 200 investment professionals operating in 11 countries, nine of which are based in Asia.

The firm’s last fund launch came in September 2015. Called the Asia ex-Japan Equity Ucits fund, the fund invests in a portfolio of between 40 and 60 mid to large-cap stocks issued by companies in the Asia ex-Japan region.

The company said further launches are planned in 2016, providing access to a broad range of exposures across developed and emerging markets.

Ucits, or undertakings for the collective investment in transferable securities, are investment funds regulated at European Union level.

Provider view

Mr Watanabe said: “Our Japan Focus fund has been launched in response to investor demand for specialist expertise in actively managed investments in Japan

“We have strong relationships locally which provide our team with unique insights into the underlying companies, and the ability to tap into opportunities that may have otherwise been overlooked.”

Adviser view

Robert Forbes, chartered financial planner at London-based Stadden Forbes Wealth Management, said: “Japan has been economically paralyzed for 20 years now. That does not mean they will come out of paralysis any time soon. Their problem lies with their aging population that is sitting on their cash rather than helping their economy by spending money. There are other markets, in my opinion, that are more attractive from an investment point of view such as the US and the UK.

“How do you get a population to spend money without changing the way the market works? It is a difficult thing to do. An underlying cultural problem cannot be solved by a couple of policies.”

“This is not to say that Japan does not hold good opportunities for investors – especially as they are increasing exports to countries like China. I think everyone should have a little bit of exposure to Japan.”

Charges

Ongoing charge figure of 0.75 per cent

Verdict

The Japanese market is an interest story with deflation playing the starring role. Abeonomics, the name given to a suite of economy measures introduced by current Japanese PM Shinzo Abe after his re-election in 2012, is the latest in attempts to revive the sluggish economy. Whether it has been a success or failure is open for debate.