AJ Bell Youinvest Fundamentals - Legg Mason Japan EquityFeb 18, 2020
Hi, I'm Ross Bowles AG, Chief Investment Officer of Bells, and welcome to the latest edition of Fundamentals, where I'll be looking at the third most popular fund on Bell AG's investment platform over the past month, namely Legg. Mason Japan Equity the Sixth and The £76 million collective mandate 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 seeking 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, now there is no return on the to speak and the ongoing charge figure is one point zero one percent for those Who puts weight on such things?
Legg Mason Japan equities get a four-star rating from Morningstar, but perhaps more importantly, they are eligible to sit back and sip. The background is a concern. deal in one has only 37 holdings and, unsurprisingly given the growth focus, is heavily skewed towards healthcare and tech, although industrials and consumer cyclicals are well represented, unsurprisingly given the Japan's lack of domestic resources and dependence on imports. I don't have to wait on any of the key holdings, including drug developer, small dream brokerage, and Nihon's M&A center. Japan is what Europe, the US and the UK are trying to avoid becoming a basket case riddled with debt, near-deflationary traps with below-trend growth despite more than two decades of low rates. of zero interest, multiple quantitative easing schemes and endless government tax packages, um, doesn't sound so good, but I think there are three possible reasons why you invite other investors to look first at anyone who thinks the pound is going to fall even more so as a result of the Bank of England's three-part monetary package?
Maybe looking to park money abroad. shows how the yen gains against the pound last year, it rose about a third of a second. Fiscal and monetary stimulus. Yes, they've been tried before, but it's clear that, but the Bank of Japan and Prime Minister Shinzo Abea aren't going to give up easily if it's all p.m. has just released a new fiscal package with a prima facie value of 28 trillion yen or 210 billion pounds to speed up the construction of a new maglev line between Tokyo and Osaka to help rebuild kyo shu after the spring earthquake and support welfare spending they know however only 6 trillion yen or so this is new spending above and beyond previous plans and it only falls four point six trillion this year yet the BOJ is still running their 80 trillion yen a year QE scheme six hundred billion pounds a year more than our own Bank of England made in total since 2009 plus the BOJ may drive interest rates into even deeper negative territory this by the way it shows Japan's main policy rate since 89 may look increasingly familiar to Bank of England and Federal Reserve students if this worked p For the economy or not remains to be seen, but record low rates and bond yields have not generated cash for equities in the UK, US and Europe.
The same can happen in Japan and that may be the opinion of bu. Yesterdays of this fund, the third reason to maybe get involved is that Japanese corporate governance is changing, and for the better, encouraged by the Prime Minister, my Prime Minister Abe helps AB, a program of social, economic and political reform that puts a lot of more emphasis on stock dividends. buybacks and generating a fair return for shareholders now, this is not to say that funds for all the Nikkei 2 to 5 index have performed poorly in yen terms this year as faith in a banal mixer faltered than stumbled and she saw the yen go up when Abby really wants it to go down to help exporters and if the yen goes up then she stands to lose in currency what she could gain in stock prices in the background if we take the above Nikkei chart further back , you can see what I mean by Japan the normal model wants to emulate since its own debt-driven stock and real estate bubble burst in 1989; benchmark nikkei 202 5 index is getting lower with big rallies triggered by new stimulus plans fizzl Exiting every time this fund at least shouldn't worry too much about the big picture as it focuses on high growth realized in small-caps, as you can see in this final chart, outperformed the performance benchmark by far in 2016 and over the last three, five and ten years we know Legg Mason Japan stock is up 44 percent today here in terms sterling even if helped by strong yen IV and that's not bad when the two to five Niki is well under 12 percent in currency terms this year but you should look into all the issues I've raised today and make sure the fund fits your own personal investment objectives, time horizon, target returns, and risk appetite before you consider buying it, to yes thanks for looking and hope to see you next time
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