This year its leading Nikkei 225 index is up 23.17 per cent, although the market is down since its peak in May.
Year-to-date performance of index
Source: FE Analytics
Some investors may be wary of investing in the country, believing the QE-induced surge has already been and gone, but today’s events suggest there is still potential in the market.
The Topix index rebounded at its greatest rate in more than three months this morning, up 2.29 per cent at the time of writing.
For investors who want access to this potential but are too wary to pick a specialist fund – or who don’t have space in their portfolio – FE Trustnet looked at the multi asset and global funds that are sticking with the country.
We looked at funds with a track record of more stable returns, making them more appealing to anyone with a lower appetite for risk.
CF Ruffer Total Return
The fund has a reputation for solid capital protection, although with 15 per cent of the portfolio invested in Japan, it stands to gain from an ongoing rally in the country.
The portfolio, run by FE Alpha Manager duo David Ballance and Steve Russell, has underperformed in recent years due to its cautious stance.
FE Trustnet recently highlighted the fund as one that will effectively protect capital if markets start heading down.
Over the longer term, the fund has beaten the IMA Mixed Investment 20%-60% Shares sector and its benchmark, split between the FTSE All Share and FTSE British Government All Stocks.
More importantly, the fund has consistently performed well in falling markets, returning 20.86 per cent in 2008 while the benchmark lost 9.35 per cent and its peers tumbled 15.84 per cent.
It was a similar story in the correction of 2011 when the Ruffer fund stayed in the black, albeit behind its benchmark, compared with losses of 1.89 per cent from its sector.
Calendar year performance of fund vs sector and index
Source: FE Analytics
Year-to-date, the Ruffer Total Return fund is actually ahead of the market and other funds in the sector, having gained 8.47 per cent.
It requires a minimum investment of £1,000 and has ongoing charges of 1.23 per cent.
Miton Special Situations
In spite of FE Alpha Manager Martin Gray’s terminally bearish stance, he has taken a large bet on the success of Japanese markets.
The fund has 10.5 per cent of the portfolio invested in Japan through holdings in GLG Japan Core Alpha and the JP Morgan Japanese investment trust.
Much like the Ruffer portfolio, Miton Special Situations is a fund that fares well in stiff headwinds. In 2008, the fund made 7.26 per cent while the IMA Flexible Investment sector shed 26.11 per cent. It was the same story in 2011, when the fund outperformed again.
In the last decade, Miton Special Situations has not had a single negative calendar year, making it a good option for more cautious investors.
While the fund has lagged its peers over the short- and medium-term, it has outperformed over the last decade, returning 137.31 per cent while the sector made 90.1 per cent, according to FE Analytics.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The fund requires a minimum investment of £1,000 and has ongoing charges of 1.86 per cent.
Lindsell Train Global Equity
The recently launched Lindsell Train Global Equity fund has the highest conviction in Japanese markets of all the portfolios on this list, with 29.1 per cent of its assets invested in the country.
It has a number of Japanese firms in its top-10 holdings, including consumer electronics giant Nintendo and financial services firm Japan Exchange Group.
These two holdings alone make up more than 10 per cent of the fund, with the top-10 holdings accounting for 57.9 per cent of the portfolio.
Over its short history, the Lindsell Train fund has beaten both the IMA Global sector and MSCI World index.
Since launch, it is up 44.71 per cent, nearly double the returns of the IMA Global sector and more than 15 percentage points ahead of the MSCI World index.
Performance of fund vs sector and index since launch
Source: FE Analytics
The fund requires a minimum investment of £1,500 and has an annual management charge of 1.15 per cent.
It is managed by Michael Lindsell.
M&G Global Leaders
The £1bn M&G Global Leaders fund is another one to consider for anyone wishing to make a cautious foray into Japan.
Managers Aled Smith and Michael Oliveros have 13.3 per cent of the portfolio invested in the country, with Japanese financial services firm Nomura featuring in their top-10 holdings.
While the portfolio hasn’t shot the lights out, it has consistently outperformed the IMA Global sector and MSCI World index.
The fund has made 134.58 per cent over the last decade, compared with 114.19 per cent from the index and 102.48 per cent from the sector. The fund is also yielding 1.43 per cent.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
It is worth noting that the fund has not fared well in falling markets, tumbling further than its peers and the index in both 2008 and 2011.
It is a more volatile choice, as it is purely invested in equities, while the Miton and Ruffer funds have the ability to cross asset classes.
M&G Global Leaders requires a minimum investment of £500 and has ongoing charges of 1.67 per cent.
Threadneedle Global Select
The £789.3m Threadneedle Global Select fund, managed by William Davies, has 11 per cent invested in Japan.
However, the majority of the portfolio is invested in the US, with names such as Google, Walt Disney and American Express in its top-10.
The fund has outperformed its peers over one, three, five and 10 years. It has performed in line with the MSCI World index over three and five years.
The fund has made 137.18 per cent over the last decade, compared with 102.48 and 114.19 per cent from the sector and index respectively.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The fund requires a minimum investment of £2,000 and has ongoing charges of 1.71 per cent.
