Tokyo ris­ing

Finweek English Edition - - UNITTRUSTS -

JA­PAN IS AGAIN be­ing talked up as an in­vest­ment des­ti­na­tion for 2011 and 2012 but South African in­vestors have limited tools through which they can gain ex­po­sure to the re­gion. While a num­ber of lo­cal as­set man­agers of­fer gen­eral Asian funds, one op­tion that of­fers pure ex­po­sure to the re­gion is the Stan­lib Off­shore Ja­pan Fund, which is geared to­wards higher end, more so­phis­ti­cated in­vestors.

In­vestors can par­tic­i­pate af­ter a US$2 500 ini­tial de­posit, sup­ported by a min­i­mum of $1 000/month and the fund is bench­marked against the Tokyo Stock Ex­change TOPIX to­tal re­turn in­dex.

Look­ing at a five-year re­turn on this fund is mean­ing­less. In line with the broader Ja­panese in­dex, the fund has lost half its value over the pe­riod. As the at­tached graph of the Nikkei shows, Ja­pan has been a mis­er­able place to in­vest over the past 20 years. Added to that, Ja­pan’s econ­omy – driven by ex­ports – has been hurt by the strength of the yen against the US dol­lar, which reached a 15-year high.

How­ever, Ja­pan is gath­er­ing some sup­port as signs emerge that the re­ces­sion is fad­ing into the past and in­dus­tri­alised na­tions are gain­ing some trac­tion. Fi­nan­cial pol­icy reg­u­la­tors in Ja­pan have also in­di­cated they’re quite pre­pared to ac­tively en­ter the for­eign ex­change mar­ket to weaken the yen and make its ex­ports more at­trac­tive. Those moves meant that in Oc­to­ber 2010 off­shore in­vestors be­came net buy­ers of Ja­panese eq­ui­ties as they po­si­tioned them­selves for a weaker cur­rency.

The fund is well di­ver­si­fied, with no share com­pris­ing more than 4% of the port­fo­lio. In terms of sec­tors, the fund has a lean­ing to­ward fi­nan­cial ser­vices and technology busi­nesses. One as­pect to keep in mind when con­sid­er­ing this fund is the high po­ten­tial up­front costs of 5% plus man­age­ment fees of 1,3%.

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