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Apollo fund raises exposure to Japan

Apollo Multi-Asset Management has topped up its only direct Japanese holding.

The company’s cautious and balanced funds hold less than 2 per cent and 3 per cent respectively in Neptune Japan opportunities.

Apollo says the Neptune fund is falling in line with the market so far but it invests mainly in multinational firms in a range of sectors that dominate their industries.

It believes these firms can avoid the worst of the current situation in domestic Japan because they are focused on global growth.

The firm considers recent market falls will enable Apollo to gain exposure to strong companies at a lower valuation through the Neptune fund.

Apollo also has indirect exposure to Japan through a five-year kickout structured product, the SG 22 per cent autocall, that will pay a 22 per cent coupon if the Nikkei 225 index is above 9,730 points in May 2012.

Apollo believes the product is unlikely to meet this target due to the effects of the tsunami disaster but says this is potentially a positive bec- ause the payout will double to 44 per cent if the index exceeds 9,730 points by May.

Another structured product that provides geared exposure to volatility, the BNP Parabas Harewood vol edge offering, has been performing well for Apollo.

The multi-manager believes this could dampen losses in its portfolios. It also sees opportunities for the environmental sector emerging from the recent tragedy.

Apollo fund manager Tom McGrath says: “If there can be winners from such a tragic event, then it will be the environmental sector, where companies involved in the toxic clean-up will benefit.

“Equally, there will be a greater focus on alternative energy sources to nuclear and our exposure to this sector via the Impax Asian environmental fund should be a natural beneficiary.”


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