Fund of the week: Strong returns from Japanese firms
Despite the headwinds coming from Japan's economy, it's still possible to make strong returns, as this fund proves.
The Bank of Japan's 5trn ($61bn) asset purchase programme helped lift the Nikkei to a one-year high in March. But since then it has slid 11.8% on fears about the global economy. Yet Chern-Yeh Kwok, manager of the Aberdeen Global Japanese Equity Fund, tells Investment Week that "despite the headwinds" it's still possible to make strong returns.
Kwok's £152m fund boasts a three-year annualised performance of 5.82% against a benchmark of 0.65% and a sector average of 1.2%. It is also in the top quartile over one, three and five years. So far in 2012 it is up 13.04% against a sector average of 11.86%.
The fund focuses on consumer goods (30%) and industrials (20.5%), where Kwok looks for quality companies that are "not only strong in the domestic market but have proved themselves overseas as well". This includes car manufacturers Honda and Toyota, as well as nappies and feminine care products firm Unicharm, which has a leading market share in China, Thailand, Indonesia and Japan.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Another theme is the trend towards factory automation, with industrial stocks Fanuc and Nabtesco among the top ten holdings.
2011 was a difficult year that included the earthquake and tsunami in March, a strengthening yen, mounting concerns over the global economy, and disruption from floods in Thailand. Yet Kwok's fund stood strong. "A number of our holdings were relatively unaffected by the earthquake, while others were able to recover quite quickly."
The reason, he says, is the fund looks for firms with robust balance sheets and that are therefore "a little bit more conservative".
Contact: 01224-425255
Aberdeen Global Japanesetop ten holdings
Canon Inc | 6.5% |
Shin-Etsu Chemical Co | 6.1% |
FANUC Corp | 5.2% |
Keyence Corp | 4.6% |
Honda Motor Co | 4.5% |
Bank of Yokohama | 4.1% |
Unicharm Corp | 4.0% |
Astellas Pharma | 3.9% |
Toyota Motor Corp | 3.9% |
Nabtesco Corp | 3.5% |
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Cost of Christmas dinner jumps 6.5% as grocery price inflation rises again
The average Christmas dinner for four now costs £32.57 as grocery price inflation increases - but what does it mean for interest rates?
By Chris Newlands Published
-
Taking control of your business expenses with Wallester
Why Wallester Business is your cost-effective solution to help you take financial control of your business
By MoneyWeek Published