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Darwin fund benefits from weakening yen

TM Darwin founder David Jane has bought Japanese exporters and hedged out currency risk in the £24m TM Darwin Multi Asset fund to take advantage of the weakening yen.

Following the appointment of new prime minister Shinzo Abe in December, the Bank of Japan expanded its asset-purchase program by ¥10trn (£78bn) by buying more Treasury discount bills and Japanese government bonds. Abe has expressed his desire to set an inflation target of 2 per cent for Japan within a few years.

The yen weakened following the increase to the asset-purchase program, with the currency falling nearly 5 per cent from ¥84.4 to the US dollar on December 20 to ¥88.4 on 17 January.

In December, Jane hedged out the yen exposure in the Multi Asset fund and bought exporters that would benefit from the weakening yen. His exposure to Japan increased from 5 to 7 per cent as a result of the move.

Jane says: “We anticipated the weakening yen and it has paid off. It has been incredibly weak, with quite big moves seen in the currency.

“The exporters will benefit from a weakening yen and the strengthening global economy. We expect China and the US to recover quite strongly and that will help Europe, which will properly recover once there is certainty about monetary policy. This higher demand will help the Japanese exporters that export to these economies.”

Whitechurch managing director Gavin Haynes says: “The weakening yen is a theme we believe in strongly and it has started to pay off handsomely since the change of politcal regime in last quarter of 2012. I expect the theme to continue to be rewarding this year.”


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