Talking Point  

Japan investment trusts lure hungry investors

Japan investment trusts lure hungry investors

Japan investment trusts have stormed the charts over the past month, with investors showing renewed confidence in the performance of Japanese corporates.

According to QuotedData's latest investment companies round up, September saw renewed interest in Japanese investment trusts.

This coincided with strong outperformance from trusts such as Baillie Gifford Shin Nippon, Fidelity Japanese Values and JPMorgan Japanese.

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These trusts were among the top-ten best performers over September, the data revealed, with the Baillie Gifford Shin Nippon investment trust gaining +10.5 per cent in net asset value (NAV) terms, putting it in pole position.

Also according to the research, NAVs were generally "pretty strong" in September, with very few investment trusts reporting drops in their NAV. 

Top 10 best performers (September 2016)

  • Baillie Gifford Shin Nippon    +10.5%
  • BlackRock World Mining    +9.2% 
  • UIL    +9.0%
  • Fidelity Japanese Values    +8.0%
  • JPMorgan Japanese    +7.7%
  • Crystal Amber    +7.4%
  • International Biotechnology    +7.4%
  • Golden Prospect Precious Metals    +7.1%
  • VietNam Holding    +6.2%
  • BlackRock Commodities Income    +5.8%

Source: QuotedData

This came after another Baillie Gifford investment trust, the growth-focused Baillie Gifford Japan Trust, reported strong year-on-year returns of 25.5 per cent NAV.

In the year ending 31 August 2016, the trust also reported a share price total return of 16.3 per cent, against the total return of the benchmark index - the Topix - which returned 21.5 per cent in sterling.

In a statement to the markets, the managers of the Baillie Gifford Japan Trust said the strong absolute return figures in NAV terms had been bolstered by the increase in the value of the yen.

Over the period, the yen rose 37.6 per cent to  ¥135.5 per £1, which had last been seen in 2012, before the advent of Abenomics and a stricter fiscal policy environment in Japan.

The statement said: "The Japanese stock market fell in yen terms by 18.9 per cent as there were global worries, particularly about Chinese growth, and the impact of a stronger yen also affected projections for earnings. 

"However, the trust's investment in secular growth companies such as Misumi has been helpful. Misumi, which has been in the portfolio for over ten years, has contributed the most to overall performance."

The managers also cited several internet-related companies, such as online fashion retailer Start Today, as having contributed to positive performance for the trust.

FTAdviser has reported that wealth managers and investment houses are starting to increase their holdings to Japanese equities against a global backdrop of political and increasing economic uncertainty.

Earlier this month, Luca Paolini, chief strategist at Pictet Asset Management, said the team was maintaining an overweight to Japanese equities.

He said: "We continue to be positive about Japanese shares. Although the Bank of Japan could well end up tightening liquidity at some point, other fundamentals remain supportive."