The Bank of Japan’s ¥5trn ($61bn) asset purchase programme helped lift the Nikkei to a one-year high in March. But since then it has slid 11.8% on fears about the global economy. Yet Chern-Yeh Kwok, manager of the Aberdeen Global Japanese Equity Fund, tells Investment Week that “despite the headwinds” it’s still possible to make strong returns.
Kwok’s £152m fund boasts a three-year annualised performance of 5.82% against a benchmark of 0.65% and a sector average of 1.2%. It is also in the top quartile over one, three and five years. So far in 2012 it is up 13.04% against a sector average of 11.86%.
The fund focuses on consumer goods (30%) and industrials (20.5%), where Kwok looks for quality companies that are “not only strong in the domestic market but have proved themselves overseas as well”. This includes car manufacturers Honda and Toyota, as well as nappies and feminine care products firm Unicharm, which has a leading market share in China, Thailand, Indonesia and Japan.
Another theme is the trend towards factory automation, with industrial stocks Fanuc and Nabtesco among the top ten holdings.
2011 was a difficult year that included the earthquake and tsunami in March, a strengthening yen, mounting concerns over the global economy, and disruption from floods in Thailand. Yet Kwok’s fund stood strong. “A number of our holdings were relatively unaffected by the earthquake, while others were able to recover quite quickly.”
The reason, he says, is the fund looks for firms with robust balance sheets and that are therefore “a little bit more conservative”.
Contact: 01224-425255
Aberdeen Global Japanese top ten holdings
| Name of holding | % of assets |
|---|---|
| Canon Inc | 6.5% |
| Shin-Etsu Chemical Co | 6.1% |
| FANUC Corp | 5.2% |
| Keyence Corp | 4.6% |
| Honda Motor Co | 4.5% |
| Bank of Yokohama | 4.1% |
| Unicharm Corp | 4.0% |
| Astellas Pharma | 3.9% |
| Toyota Motor Corp | 3.9% |
| Nabtesco Corp | 3.5% |