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Threadneedle goes overweight Japan

Threadneedle has further increased its allocation to Japanese equities after the earthquake earlier this month, taking it to overweight from neutral.

Mark Burgess, the chief investment officer, says the group has added to equities in general, and Japan in particular. Threadneedle has more than £1 billion of assets under management in Japan.

“We have added to Japan both before and after the earthquake,” he says.

In February, Threadneedle raised its allocation to Japanese equities within its managed fund portfolios from underweight to neutral.

Japanese stocks were already priced at their lowest rating in 20 years before the earthquake triggered further corrections.

The country’s companies tend to have strong balance sheets, including large amounts of cash, Burgess says. Dividend pay outs, share buy backs as well as mergers and acquisitions have been rising.

As a result, several asset managers, including T Bailey and Ruffer Investment, have shown more enthusiasm about Japan.

Burgess says investing in Japan is always “an inflation play” and a play on global growth, both which he expects to pick up over the medium term.

Merrill Lynch Wealth Management says the recent correction provides an opportunity. Burgess shares this view.

“It was a tragic event and we have sympathy for the country,” Burgess says. “But it may create investment opportunities.”

Threadneedle is also overweight other equities, including America, Asia Pacific ex Japan and Latin America. It is neutral on UK and European equities and underweight bonds.


Matt Ward, Wealth management consultant, Defaqto

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