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AJ Bell Youinvest Fundamentals - Legg Mason Japan Equity

AJ Bell Youinvest Fundamentals - Legg Mason Japan Equity
hello I'm Ross Bowles AG

bell

s investment director and welcome to the latest edition of

fundamentals

where I'll be looking at the third most popular fund on the AG

bell

you invest platform over the past month namely

Legg

Mason

Japan

equity

the six hundred and seventy six million pound collectives mandate is to provide investors with capital growth and it seeks to do so by putting money to work in companies quoted on the

Japan

ese stock market and particularly firms which looks out of
aj bell youinvest fundamentals   legg mason japan equity
above-average growth prospects this helps to explain why the benchmark against which fund manager Hideyoshi or zoomy is measured is the MSCI

Japan

Small Cap index while Morningstar Taku categorizes the fund as a mid to small cap one now there's no yield to speak of and the ongoing charge figure is one point zero one percent for those who place of weight on such things

Legg

Mason

Japan

equity

gets a four star rating from Morningstar but perhaps more importantly its I sit and sip eligible the
fund is a concentrate in one it's got just 37 holdings and as could be expected given the growth focus it's heavily weighted towards health care and Technology although industrials and consumer cyclicals have good representation to unsurprisingly given

Japan

's lack of domestic resources and reliance on imports myung an energy well they've got no waiting at all key holdings include drug developer petty dream brokerage and nihon M&A center biotech players sauce a and robotics
experts Cyberdyne so those are the mechanics the question is why would your fellow investors be buying

Legg

Mason

Japan

equity

fund now after all

Japan

is what Europe the US and the UK are trying to avoid becoming a debt riddled basket case traps in near deflation with sub trend growth despite over two decades of zero interest rates multiple quantitive easing schemes and endless government fiscal packages hmm doesn't sound so good but I think there are three possible reasons why your invite
aj bell youinvest fundamentals   legg mason japan equity
fellow investors are looking first anyone who thinks the pound is going to fall further as a result of the Bank of England's three-pronged monetary package maybe looking to park money overseas foreign Holdings will rise in value once translated back into sterling assuming of course the share prices remain unchanged the chart here shows how the yen is gained over the pound on the past year it's increased by about a third second fiscal and monetary stimulus yes they've been tried
before but it is clear that but the Bank of

Japan

and Prime Minister Shinzo Abe a are not going to give up easily if it's all the p.m. just launched a new fiscal package worth on the face of it 28 trillion yen or 210 billion quid to accelerate the construction of a new maglev line between Tokyo and Osaka help rebuild kyo shu after the spring earthquake and support welfare spending do know however that only six trillion yen or so this is new spending above and beyond prior plans and just four
point six trillion falls in this year however the BOJ is still running its 80 trillion yen a year QE scheme six hundred billion quid 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 deeper negative territory this by the way it shows

Japan

's main policy rate since 89 may look increasingly familiar to students to the Bank of England and the Federal Reserve whether this worked for economy or not remains to be seen but
aj bell youinvest fundamentals   legg mason japan equity
record low rates and bond yields haven't written cash toward stocks in the UK US and Europe same may happen in

Japan

and that may be the view of buyers of this fund the third reason for maybe getting involved is

Japan

ese corporate governance is changing and for the better encouraged by Prime Minister's my Prime Minister Abe aid AB anomic s-- social economic and political reform program this is places far greater emphasis on dividends stock buybacks and generating a fair return for
shareholders now this isn't to say the funds for everybody the Nikkei 2 to 5 index has done badly in yen terms this year as faith in a banal mixers wobbled that stumble seen the yen rise when Abby really wants it to fall to help exporters and if the yen goes up then you may lose in the currency what you could gain on the share prices in the fund if we take that previous chart of the Nikkei further back you can see what I mean about

Japan

being the role model normal wants to emulate since its
own debt fueled stock and property bubble burst in 1989 the Nikkei 202 5 benchmark is grounded lower and lower with big rallies prompted by new stimulus plans fizzling out every time now this fund at least may not to worry too much about the big picture given focuses on high growth made in small caps as you can see from this final graphic it's massively out performance benchmark in 2016 and over the last three five and ten years know that

Legg

Mason

Japan

equities up 44 percent here today in
sterling terms even if it has been helped by the IV strong yen and that's not bad when the two to five Niki is well down like 12% in headline currency terms this year but you must research all of the issues I've raised today and make sure that the fund fits with your own personal investment goals time horizon target returns and appetite for risk before you consider buying into it so thank you for watching and I look forward to seeing you next time