Japan Investment Funds

[mx stu]

have flown in the first half of the year, especially Legg Mason Japan Equity A which is up some 68%.

Any opinions as to whether this trend is likely to continue into the second half? Have some cash in my S&S ISA and trying to weigh up risk versus reward. Even if it only returns, say, 25% in the next 6 months that's obviously far in excess of the cash rate. From what I've read in the press it appears unlikely the next 6 months will go the opposite way however can't find any clear views.

Any comments/ views gratefully received.

[jeff m2]

Yep, Japan is the most "up" country this year.
I had a thread a while back something like "Japan WTF".

Due to Abenomics, a sort of finanacial rebirth, they are determined to get growth even at the expense of the Yen.

Here you go......http://www.bloomberg.com/news/2013-07-11/yen-to-drop-18-as-boj-spurs-normalization-chart-of-the-day.html

Also.....(T.Rowe Price)
Although the Japanese market gained about 2% for the quarter, developed markets across the rest of the Asia-Pacific region posted steep losses. The benchmark Nikkei Average was volatile as investors questioned whether the government would succeed in its effort to end the multi-decade deflationary spiral and attain a 2% inflation target through monetary policy measures. The Bank of Japan, at the direction of Prime Minister Abe, is moving aggressively to bolster the Japanese economy, but the central bank declined to announce additional stimulus at its mid-June meeting. Economic growth in China has slowed and short-term lending rates have climbed to record levels. However, the government is refraining from injecting additional liquidity into the financial system because it is trying to curb many years of runaway credit growth. China's leaders are attempting to manage a gradual economic slowdown and a transition from an export-driven to a domestic consumption-oriented economy.

Edited by jeff m2 on Thursday 11th July 15:58

[ellroy]

Huge amount of return down to the currency, beware.

[mx stu]

Thanks for the responses, I think the risk outweighs the reward on this one for me - especially as I don't know the ins and outs/ history of the Japanese economy. Given they've already gone up so much I think it's perhaps a little too late to get involved and will stick with steady, yet returning higher than interest rates, UK Smaller Co fund.

[rotarymazda]

mx stu said:

have flown in the first half of the year, especially Legg Mason Japan Equity A which is up some 68%.

Any opinions as to whether this trend is likely to continue into the second half? Have some cash in my S&S ISA and trying to weigh up risk versus reward. Even if it only returns, say, 25% in the next 6 months that's obviously far in excess of the cash rate. From what I've read in the press it appears unlikely the next 6 months will go the opposite way however can't find any clear views.

Any comments/ views gratefully received.

I have been gradually selling my funds in the last couple of months. After it recovered from a drop, I sold the rest.

I'm happy to bank good gains and wait for something better to turn up.

[jeff m2]

mx stu said:

Thanks for the responses, I think the risk outweighs the reward on this one for me - especially as I don't know the ins and outs/ history of the Japanese economy. Given they've already gone up so much I think it's perhaps a little too late to get involved and will stick with steady, yet returning higher than interest rates, UK Smaller Co fund.

A good way to approach investing is to look at the way your Grandma shopped, she would avoid the mushrooms if the price was up and settle for Peas. When the price of Mushrooms came down she would buy them.
To her, Mushrooms tasted better when the price was right.

Finding a place to invest needs a little understanding of what can happen, UK does not have great growth prospects because Sterling is at risk. Carne does not have the same options as Bernake because the UK has inflation whereas the US does not. (Nor does Japan)

So small cos is better than Sterling, but Cos with foreign earnings will likely prevail over domestic unless employment improves dramatically.

I would say there is somethng left in Japan maybe another 10% in Dollar terms, but really you should build up what are known as core holdings before dabbling in the more speculative.

So lets say you have 5K in a UK fund, 1K in a Japan fund and 1K in beaten down Emerging Markets would make sense, assuming you have more than three years life expectancy

Try to understand how funds and markets work. Take a US fund, a couple of weeks ago Bernake hinted that the end of QE was in sight. The Market tumbled...but individual stocks still carry on earning, their price may have been dragged down with the market but Chevron and G.E. don't say "Oh crap the Markets down we better close" They shrug their shoulders and consider whether a buy back is on the books.
Quality will usually prevail.