Japan-focused portfolios have made some of the best returns of 2013’s opening half as the rally in country’s stockmarket continued.
FE Analytics shows Hideo Shiozumi’s £206.9m Legg Mason Japan Equity fund was the best performing portfolio in the six months to 30 June 2013, returning ￼53.75 per cent compared with the 24.12 per cent gain in its peer group.
As well as delivering strong six-month performance, Legg Mason Japan Equity is ranked first quartile in the IMA Japan sector over one, three and five years to the end of June.
Hargreaves Lansdown investment analyst Richard Troue says: “On the whole, the manager knows what he’s looking for and has a specific focus on the ‘new Japan’, technology businesses and medical and consumer companies that benefit from the ageing population.
“There is a very specific philosophy here but investors do have to appreciate that it can come with significant volatility and is quite a high risk fund.”
Osamu Tokuno’s £50.5m Invesco Perpetual Japanese Smaller Companies fund comes in second place after returning 43.06 per cent against the IMA Japanese Smaller Companies sector’s 29.36 per cent gain.
The Japanese stockmarket has soared since the end of 2012 after prime minister Shinzo Abe unveiled a $72.1bn stimulus package, committed to raising inflation to 2 per cent and promised structural reforms to lift the long-term growth rate.
In total, seven of the 10 top-performing slots are taken by funds from the IMA Japan or Japanese Smaller Companies sectors.
Chelsea Financial Services managing director Darius McDermott, who tipped Japan as the preferred market at the start of the year, is still “very much” a believer in the Japan story.
“Japan has its upper house election this month and it is very much expected that Abe’s party will win that as well,” McDermott says.
“If it didn’t, then that would be a real setback and we would retain the right to review our position on Japan. But if Abe does win, we think it would at least give Japan a chance of the next level, which is structural change.”
Troue adds: “All in all, I’m still reasonably positive on the Japanese market. Even though the market has risen strongly over the past few months, it still looks reasonably good value compared with other developed stockmarkets.
“I’d still be willing to maintain an overweight position in Japan, at the same as using a bit of commonsense to buy on the dips and take some profits on a bounce.”
Edward Guinness and Matthew Page’s $2.1m Guinness Alternative Energy fund came in third place with a 42.09 per cent return, followed by the £17.3m FF&P US Small Cap Equity fund with 36.67 per cent and Linden Thomson’s £187.6m Axa Framlington Biotech with 35.80 per cent.