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Trade of the Decade: Part 2 (Japan)

Posted by: Brian Dennehy

In the current uncertain environment we like to focus on the returns investors can achieve if they look beyond the short-term noise.  Back in 2010 we set out two ‘Trade of the Decade’ ideas.  Here is an update on the second of those: Japanese Smaller Companies.
 
The Numbers
  • Since Jan 2010, our chosen fund – M&G Japanese Smaller Companies – is up 257%.  
  • That is 169% more than the FTSE All-Share return of 88%.
Over-looked and Under-researched
Back in 2010, Japan Smaller Companies was the cheapest sector within developed nations.  Japanese companies were cash rich and could cope with the Japanese economy languishing in the doldrums.  
 
Japanese smaller companies are still over-looked and under-researched.  
 
Japan has not been popular with global investors for many years.  It is easy to find reasons if you wish to be gloomy – the focus for years was high debt and an ageing population, and now to this has been added the faltering popularity of Prime Minister Abe.  
 
Yet, as we have said many times, sometimes such well-aired risks are already allowed for in the price.  Plus, our technical indicators suggest that the Japanese stock market is on the verge of breaking upwards out of a very long sideways trend.  
 
Certainly not time to sell.

ACTION FOR INVESTORS
  • Build an investment plan around long-term themes
  • This helps focus the mind when short-term noise becomes deafening
  • Consider M&G Japanese Smaller Companies

FURTHER READING
  • Trade of the Decade: Part I - India

Click here to download the latest version of TopFunds Guide

Topic: Market commentary


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