Old Mutual Global Investors head of multi-manager John Ventre has cut his overweight to Japan as he sees the trade as being “far too consensus”.
Ventre, who manages OMGI’s Voyager, Spectrum and Generation multi-manager ranges, was running an overweight to Japan of about 3 per cent of his global equity exposure.
This was scaled back to neutral in recent weeks, before the country was hit by a sell-off.
Ventre says: “The consensus was there for a very good reason but at some point it just becomes the trade that everybody has.
“The Japan trade is one that we might come back to because the fundamental case is still there but it needs to get a bit less crowded for us first.”
Ventre has directly-invested exposure to Japan within his funds, but has implemented this tactical move through futures. These are denominated in the yen, which removes the risk of returns being affected by movements in the currency.
Japan caught investors’ attention after prime minister Shinzo Abe unveiled a massive stimulus package designed to kickstart the world’s third-largest economy. The Nikkei 225 jumped 57 per cent in local terms last year, its best performance since 1972.
But the market has borne the brunt of the sell-off that has hit global stockmarkets over the year so far, with the Nikkei 225 dropping 8.43 per cent between the start of the year and 5 February.
Charles Stanley Direct head of investment research Ben Yearsley says: “Holding Japan certainly is becoming more consensus. But there are still a lot of risks with Abenomics and whether it will deliver, therefore there are still many opportunities for investors.”