The Bank of Japan’s Halloween treat for investors this year was more Abenomics. The Bank is to expand its bond-buying programme from ¥60trn-¥70trn to ¥80trn, while also accelerating its exchange-traded-fund and property-security purchasing programme.
What’s more, the Japanese government’s pension fund is to buy more Japanese stocks. This is a bullish development and means Japan is “one of the most interesting developed markets”, says Bestinvest’s Jason Hollands.
One way to exploit this trend may be through the Baillie Gifford Japan Trust, says Leonora Walters in Investors Chronicle. The Edinburgh-based trust, which aims for long-term capital growth, invests in small- to medium-sized Japanese firms expected to deliver above-average growth.
It’s been run by Sarah Whitley since 1991, it has outperformed its benchmark Topix index over three, five and ten years, delivering a return of 164% over five and 104% over three years. Its performance over one year is less inspiring but, as Walters notes, the trust targets the longer term, so investors should not place too much weight on this.
Whitley typically has a portfolio of 40 to 70 investments and looks for firms with innovative business models or generating strong sales overseas, taking a three- to five-year view.
Currently, 24% of the trust is invested in commerce and services firms, 22% in manufacturing and 14% in electronics.
There can be no guarantee Japan’s monetary policies will continue to boost equities, notes Walters, but the fund has proved it can generate strong returns even when the wider market can’t. It has an ongoing charge of 0.89%.
Contact: 0800-917 2112.
| Top ten holdings | |
|---|---|
| Name of holding | % of assets |
| Fuji Heavy Industries | 3.50% |
| SoftBank | 2.90% |
| Iriso Electronics | 2.80% |
| Don Quijote | 2.70% |
| Itochu | 2.70% |
| Kubota | 2.60% |
| Toyo Tire and Rubber | 2.60% |
| Sysmex | 2.60% |
| Japan Exchange Group | 2.40% |
| CyberAgent | 2.40% |