Architas chief investment officer Caspar Rock has increased Japanese equity exposure in his Multi Asset Active range.
Rock recently started a holding in Andrew Rose’s £879.5m Schroder Tokyo fund and has been adding to his position in Stephen Harker, Neil Edwards and Jeff Atherton’s £1bn GLG Japan Core Alpha fund’s hedged share class.
Japanese equities have performed strongly of late and have been tipped by many in the investment community after Shinzo Abe became prime minister in December last year.
The new Japanese government unveiled a stimulus package of £72bn in a bid to revive the economy, while the Bank of Japan doubled its inflation target to 2 per cent.
The Schroder Tokyo fund is overweight industrials and consumer services while GLG Japan Core Alpha is overweight banks and electrical appliances.
Rock says: “Across the Active range we have substantially reduced our underweight to Japan since the middle of last year. We now hold just a very small underweight compared to our asset allocation model. However, we remain overweight in Japan compared to the IMA sector.”
Rock has also been reducing his heavy overweight to US equities and, as well as adding to Japan, has been buying European equities.
He does not own any gilts in the Active range at all despite “the risk model saying we should own some”.
He says: “We do not see much capital upside in gilts. We think the yields are too low and if there is some inflation coming along, then capital losses will be quite substantial. It is quite a long duration.”
Bestinvest managing director Jason Hollands says: “Japanese shares are optically cheap on numerous metrics. Valuations on Japanese companies have progressively de-rated for some time to the point where many Japanese companies trade below their book value.”