What is a Japan fund?
Investors who wish to diversify their portfolios internationally can consider investing in a Japan fund, a fund that invests at least 80% of its assets in Japanese equities. With the world’s third largest economy, Japan’s stock market offers a wide range of world-leading companies across sectors.
Why invest in a Japan fund?
Japan is renowned for its political stability and excellent corporate governance. It is a centre for sophistication and innovation and its companies are noted for their strong balance sheets with little or no debt. The country has established trading links within the fast-growing region of Asia and its well-financed multinationals dominate their industries.
Japan’s economy grew rapidly from the 1960s to the 1980s, driven by high rates of investment, however the bubble burst in 1990 following sharp interest rate rises.
Japan’s stock market has taken several decades to return to the levels seen during that period but it now offers potential opportunities for investors, especially in cyclical industries that should prosper in an economic recovery.
The benefits of using funds
If you feel you do not have the time, knowledge or means to oversee your own investment portfolio, you can delegate this to professional managers by investing in a Japan fund.
By investing just a few hundred pounds in a fund, you can usually obtain exposure to far more assets than you can by investing directly in the market yourself, thereby diversifying exposure and potentially reducing risks. Funds also offer the benefit that they can transact investment assets free of capital gains tax (CGT).
Investing in a Japan fund will usually involve taking on a certain degree of risk, however. Learn more about understanding your risk profile here.
The Liontrust Japan Equity Fund
The Liontrust Japan Equity Fund is managed by Thomas Smith. The Fund invests at least 80% in shares of Japanese companies. These are companies which, at the time of purchase, are incorporated, domiciled, listed or conduct significant business in Japan.
The Global Equity investment process
The fund manager believe the key to generating outperformance is through high conviction, long-term, research-led company selection.
The Liontrust Japan Equity Fund aims to identify Industry Leaders across Japan via a sector-by-sector analysis process investing in large, multinational companies that dominate their global industry.
These companies have greater exposure to faster growing regions, such as the emerging markets, allowing them to benefit from revenue growth that the manager believes is far in excess of that achievable in Japan.
At a stock level, the Fund is highly differentiated from its peers, and is positioned for global growth with less reliance on the domestic market given the country’s deeply entrenched demographic, fiscal and macroeconomic problems.
Selecting the best manager is a challenge
The funds offered by Liontrust are actively managed, meaning that you have a professional determining which assets to invest in at any given time. When selecting a Japan fund, we recommend you seek the advice of a financial adviser.
