AJ Bell Youinvest Fundamentals - Legg Mason Japan Equity

Hello, I'm Ross Bowles AG Bells Investment Director and welcome to the latest edition of Fundamentals, where I will be analyzing the third most popular fund on the AG Bell You Invest platform over the last month, namely Legg Mason Japan Equity the Six Hundred The Collective's Mandate of seventy-six million pounds is to provide investors with capital growth and seeks to do so by putting money to work in companies listed on the Japanese stock market and, in particular, in companies that have above-average growth prospects. This helps explain why the benchmark against which fund manager Hideyoshi or zoomy is measured is the MSCI Japan Small Cap Index, while Morningstar Taku classifies the fund as mid- to small-cap, there is now no performance of the to speak and the figure for current expenses is one point zero one percent for those.

Who gives importance to those things? Legg Mason Japan Equity earns a four-star rating from Morningstar, but perhaps more importantly, it's sit-and-drink eligible. The fund is a concentrate in one, it has only 37 holdings and, as expected, given the growth focus it has. Heavily tilted toward healthcare and technology, although the industrial and consumer cyclical sectors are well represented, as would be expected given Japan's lack of domestic resources and its dependence on imports, Myung is an energy well, not They have to wait at all. Key holdings include drug developer Petty Dream Brokerage and Nihon M&A. The biotech players at the center are experts in robotics and Cyberdyne sauce, so those are the mechanisms, the question is why their fellow investors would buy the Legg Mason Japan stock fund now, after all, Japan is what Europe, the United States The United States and the United Kingdom are trying to prevent it from becoming a debt-ridden basket. case traps in a near-deflationary situation with subtrend growth despite more than two decades of zero interest rates, multiple quantitative easing schemes and endless government fiscal packages hmm, doesn't sound so good, but I think there are three possible reasons why your invitation, fellow investors, are looking first to anyone Who thinks the pound is going to fall further as a result of the Bank of England's three-pronged monetary package?

Maybe you are looking to deposit money abroad. Foreign holdings will increase in value once they are converted back into sterling, assuming, of course, that share prices remain unchanged. The graph here. shows how the yen gains against the pound last year increased by about a third second fiscal and monetary stimulus yes, they have been tried before but it is clear that the Bank of Japan and Prime Minister Shinzo Abe are not going to make you give up easily if It's all afternoon. just launched a new fiscal package worth 28 trillion yen or 210 billion pounds to accelerate the construction of a new maglev line between Tokyo and Osaka, help rebuild Kyo Shu after the spring earthquake and support social spending, However, you know that only approximately six trillion yen, this is new spending that goes beyond previous plans and only four point six trillion decreases this year;

However, the BOJ is still executing its 80 trillion yen a year QE plan, six hundred billion pounds a year more than our own Bank of England's. done in total since 2009, in addition, the BOJ may cut interest rates into even more negative territory, this because of the way it shows that Japan's main policy rate since 89 may become increasingly familiar to students of the Bank of England and the Federal Reserve, if this worked for the economy. Whether or not it remains to be seen, but record rates and bond yields have not directed cash into equities in the UK, US and Europe.

The same may happen in Japan and that may be the opinion of buyers of this fund. The third reason to maybe get involved is Japanese corporate governance is changing and for the better, encouraged by my Prime Minister Abe, helps AB anomic s-- social, economic and political reform program. This places much greater emphasis on dividends, share buybacks, and generating a fair return for shareholders. I can't say that everyone's funds, the Nikkei 2 to 5 index, have performed poorly in yen terms this year, as faith in banal mixers faltered, that stumble saw the yen rise when Abby really wants falls to help exporters and if the yen rises. so you can lose in the currency what you could gain in the fund's stock prices if we take the Nikkei chart above further back you can see what I mean by Japan being the role model that normal people want to emulate since its own debt fueled The stock and real estate bubble burst in 1989.

The benchmark Nikkei 202 5 index remains lower and lower, with large rallies caused by new stimulus plans that fizzle out each time. In small caps, as you can see in this final chart, it is well above the performance benchmark in 2016 and in the last three, five and ten years we know that Legg Mason Japan shares are up 44 percent cent here today in sterling terms, even if they have been helped by the IV. strong yen and that's not bad when the Niki two to five is down like 12% in general currency terms this year, but you need to research all the issues I've raised today and make sure the fund fits your own objectives personal investment.

Target returns and risk appetite over the time horizon before considering buying it, so thanks for watching and I look forward to seeing you next time.