Land of the rising funds

Japan equities Asia Pacific Asia ex Japan olympics

8 May 2020
| By Laura Dew |
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Funds focused on Japan have performed better than their Asia Pacific counterparts over the past year as the country navigates the COVID-19 environment, according to FE Analytics data.

There were six funds focused exclusively on Japan in the Australian Core Strategies universe and five of those had reported positive returns over the year to 30 April.

So far, Japan managed to hold off the worst of the COVID-19 pandemic, reporting only 15,000 cases compared to 82,000 in China and it had fewer lockdown restrictions than other parts of the world. Like Australia, some 700 cases related to a doomed cruise ship Diamond Princess which was moored in Yokohama.

The country’s stockmarket also held up well with the TOPIX reporting 6.7% losses since the start of 2020 to 7 May and 7.7% losses for the Nikkei 225 compared to 18.6% losses by the ASX 200.

Performance of TOPIX and Nikkei versus ASX 200 since the start of the year to 7 May, 2020

Looking at Japan funds, the best-performing fund over one year to 30 April was the $17 million Pendal Japanese Share which returned 4.9%. Allocations in this fund included 19.5% to information technology, 14% to consumer staples and 12% to healthcare.

In its latest factsheet, the fund said it was watching for the fallout of the Tokyo Olympics which had been postponed to 2021 due to the pandemic.

“Of significance to Japan is the postponement of the Tokyo Olympic Games. It was originally scheduled to be held this summer but has since been pushed back for a year. This will have a knock-on effect on tourism and consumption expectations given the Olympics was widely expected to provide a boost for the Japanese economy this year.

“The Japanese government has acknowledged that an economic slowdown is inevitable and Prime Minister Abe has vowed unprecedented stimulus measures, rumoured to be in excess of $57 trillion yen to cushion the economy.”

The Pendal fund was followed by returns of 2.5% for BlackRock iShares MSCI Japan ETF, 2.3% for Platinum Japan P, 2.1% for Platinum Japan C and 0.9% for the UBS IQ MSCI Japan Ethical ETF.

The funds’ positive performance compared to losses of 2.48% for the wider Asia Pacific single country sector which also included China, India, South Korea-specific funds.

The only outlier was BetaShares WisdomTree Japan ETF Currency Hedged fund which lost 7.4% over the period.

Performance of Japan funds versus Asia Pacific single country sector over one year to 30 April, 2020

 

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