What to buy, what to sell: Japan and race horses
Why fund tipsters are staying keen on Japan for 2006, and a chance to buy into race horses.
Why fund tipsters are staying keen on Japan for 2006, and a chance to buy into race horses...
Look east for income
Last year was a fine one for both unit trusts and investment trusts. The average fund rose 20%, not bad given that the FTSE 100 rose 16.7%. But the best performers were those that looked east for income.
This, says Andrew Pitts in Money Observer, is a reflection of the coming of age of some of the world's more far-flung markets. Firms in Japan or Singapore are now finally beginning to pay regular dividends, for example; and in total, Asian firms will have paid out a total of $70bn to shareholders in 2005. All this means that fund tipsters are staying keen on Asia, and on Japan in particular, this year.
Take a look at Melchoir Japan Opportunities, says Patrick Collinson in The Guardian. It launched only two years ago, but already has £400m worth of assets under management and was 2005's best-performing fund, beating 1,700 others to top place with a 94.1% gain. A repeat performance quite like that in 2006 is "unlikely", the fund's manager told Collinson, but there is still value, and hence potential, in Japan's small and mid-cap firms.
The second-best performer in 2005 was another Japan fund, Scottish Widows Investment Partnership's Japan Smaller Companies fund, which turned in a 76% gain. It holds many of the same stocks as the Melchoir fund, including Daifuku, which makes factory automation systems for carmakers.
But which is the best Japan fund to buy now? The Odey Japan fund, Justin Modray of Bestinvest told The Times. Japanese firms look in better shape than they have for many years", says Modray, and "we like Odey because it has good exposure" to small and mid caps.
Buy a race horse
If you've always wanted a race horse, 2006 brings good news. Launching this month is Breeding Capital, which aims to raise £5m and use it to buy and trade high-quality broodmares, foals and yearlings. The fund is to be launched and run by Christopher Holdsworth Hunt, former co-founder and MD of Peel Hunt stockbrokers, and William Sporborg, a private-equity fund manager and former jockey. The minimum investment will be £10,000, and investors will not be able to cash out until 2010. Risky though, so not for widows and orphans. See www.breedingcapital.com.