Performance of sectors following March 2011 earthquake
Source: FE Analytics
The average fund in the IMA Japan sector made a loss of more than 16 per cent within four days of the Tohoku earthquake last year, which triggered a meltdown at the Fukushima nuclear plant. The funds had just about recovered by the end of July, before being hit by the global slump in August. On average, funds in the Japan sector are down 4.9 per cent since the day the earthquake hit in 2011.
It is the same story for funds that focus on smaller companies in the country too, but to a greater extent. Funds lost 19.7 per cent within four days, rebounded into positive territory, up two per cent by July, but fell to losses of 13 per cent by mid-August. The sector is down 4.8 per cent at the moment.
Just 16.9 per cent of funds in the IMA Japan and Japan Smaller Companies sectors have made positive returns or broken even in the last 12 months, although some have performed well despite the disasters.
Performance of fund vs sector over 3-yrs
Source: FE Analytics
One such vehicle is the £53m Legg Mason Japan Equity fund, which has been fairly uncorrelated to its peers over the past one and three years.
Its performance has trailed off since the start of 2012, but the fund had recovered by as much as 21.6 per cent by October last year.
Investors who piled into the fund three years ago would have seen a 43.6 per cent return on their investment. There is reason to be cautious, though; the fund has lost 28 per cent over five years, compared with 9.6 per cent losses from the IMA Japan sector.
Performance of fund vs sector over 1-yr
Source: FE Analytics
Aberdeen Global Japanese Smaller Companies has been a more consistent performer. It has just about broken even in the past year, returning 2 per cent compared with losses of 5.4 per cent from its peers, matched its sector’s returns over three years, and is up 13.6 per cent over five years, while the average fund in the IMA Japanese Smaller Companies sector has lost 6.1 per cent.
Performance of fund vs sector over 5-yrs
Source: FE Analytics
Stephen Harker’s highly regarded £1.3bn GLG Japan Core Alpha fund has had a tough time since the earthquake, losing 8.4 per cent compared with 7 per cent losses from the sector. Harker, who lost his FE Alpha Manager status in the recent rebalancing, has a strong long-term record however: his fund has returned 19.05 per cent over five years while his peers are down 9.6 per cent.