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Japanese trusts and funds

Closed-end funds and OEICs
Avantegarde
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Japanese trusts and funds

#167989

Postby Avantegarde » September 21st, 2018, 5:28 pm

Do any investors here have money in any Japan-focused trusts or funds? I have a feeling that my portfolio could do with a bit more diversification and Japan is a country which is clearly under-represented in my investments. That has been quite deliberate so far. But have I missed the boat? Baillie Gifford's Shin Nippon trust has returned 219% in the past five years and stands on a premium of 6% while the BG Japan trust has returned 133% in the past five years (and has a current premium of 3.5%). Other trusts have performed much less impressively. Is there anything to suggest such returns will continue? Final question: does anyone have a view on good or bad Japan funds? Thanks in advance.

OZYU
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Re: Japanese trusts and funds

#168009

Postby OZYU » September 21st, 2018, 7:13 pm

We are generally shy of Japan remaining overall below weight, habit rather than logic. But have held Shin Nippon for just under 10 years, topped it up a few times, and overall it has seriously bagged, magical xirr. Difficult decision to say if I would recommend buying it today, but I recently did put it in a suggested general basket I constructed to assist a poster interested in ITs despite the premium, because every time we have hesitated and thought that maybe the best was behind us, BGS has continued to surprise us. As long as one does not make it a habit, the odd 'good one' bought at a premium won't harm a portfolio if you are in it for long enough imho.


IIRC, I seem to recall that Lindsell runs a very good Japan Fund, but not sure, worth checking it out, one of our friends did mention it.

Japan is a set of socio/economic contradictions which I can't fathom anyway. I did much work there in my career at one stage, there are many machines/robots running embedded subsystems I originally developed still presumably churning goods out in Japan, but it did never particularly help me as an investor or to understand the place, now their gardens was a different matter...


Much is said at the moment that divi seekers should increasingly look there because of changing corporate attitudes to investor returns, but we have not bought into that story because the starting base is too low and divis increases won't match the rhetoric imho. We did have a successful bit in JRIC, lovely income and XIRR while it lasted, but that was snatched away through corporate action some time back, could not find a suitable replacement at the time.

Ozyu

scotia
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Re: Japanese trusts and funds

#168011

Postby scotia » September 21st, 2018, 7:15 pm

Avantegarde - You have certainly selected two of the top Japanese ITs, both from Baillie Gifford. If you are a bit worried about the premium, have a look at a Baillie Gifford Unit Trust/OEIC, namely BG Japanese Smaller Companies. It has a 5 year return of 159%
I personally have an Ishares Japanese Smaller Cos ETF - but it doesn't have anything like the performance of the Baillie Gifford offerings. What will happen in future? - who knows! I certainly don't, so I keep a spread of investments in all regions.

OLTB
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Re: Japanese trusts and funds

#168031

Postby OLTB » September 21st, 2018, 8:35 pm

My IT portfolio includes two Japan focussed funds - JPMorgan Japan Smaller Companies (JPS) and Atlantis Japan Growth (AJG). Both of these were selected by John Baron in his ‘Summer’ portfolio.

Cheers, OLTB.

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Re: Japanese trusts and funds

#168043

Postby Bluestone77 » September 21st, 2018, 9:32 pm

I have held Baillie Gifford Shin Nippon (BGS) since around 2001, investing monthly sums plus the odd lump sum over several years. It was around the turn of the century when I converted all my unit trusts into investment trusts. However I have not bought any more since about 10 years ago as it is a large enough % of my portfolio.
It has been one of my best investments and for example was only 75p (pre share split) in 2003 which would be 15p for the current share post split. So that is x13 the original price. So the return over the period of the past 5 years is not just a "one-off"
Would I buy now ? If I was starting all over again then Yes I would, but not if the premium went above 10% - but I plan to hold this trust indefinitley. If you plan to hold for less than say 10 years it may not be a good time to buy due to the premium. As recently as 2009 the discount was greater than 20% and presumably it could go there again. So you would lose 25-30% against what the NAV does if it did. However the longer you hold the less this loss becomes "per year".

shawsdale
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Re: Japanese trusts and funds

#168130

Postby shawsdale » September 22nd, 2018, 10:56 am

In terms of the Japanese market overall, a lot of recent commentary has pointed to its more reasonable comparative valuation on PE grounds, at least relative to the USA.

With regard to specific funds: as a recent investor in BGS I did have qualms about the premium but with a long-term horizon and a liking for small cap biased investments I hope the trust’s strong track record will persist.

My life situation makes income an important consideration and until now I have also held the Morant Wright Nippon Yield fund which of those Japan funds offering an income has been among the higher yielding (over 2%).

However, the JP Morgan Japan Smaller Companies trust (JPS) has recently changed its distribution policy to a 1% of NAV per quarter dividend paid out of capital as well as revenue. I may switch from the Morant Wright fund to JPS for next year’s ISA for income purposes.

In the ‘value’ style a new trust has just been launched: Asset Value Investors Japan Opportunity Trust (AJOT):
https://www.ajot.co.uk/
Based on the 20% of the British Empire Trust (BTEM) currently invested in Japanese special situations, AJOT aims to exploit what it regards as a series of undervalued and overcapitalised small and mid-cap Japanese equities.

According to the brochure and prospectus the ‘Japanese’ segment of the BTEM portfolio which the proposed AVI trust will focus on rose by 22.6% in the year to 31st July 2018 against 14.9% for the Japanese small cap index. The new trust, like BTEM itself, will actively engage with management of the companies it invests in, as exemplified by its approach to Tokyo Broadcasting System:
https://www.british-empire.co.uk/campaign/tokyo-broadcasting-system-tbs/

The manager of British Empire and the proposed new trust, Joe Bauernfreund, explains the investment philosophy of the Japanese holdings in the middle portion of this 2017 British Empire Annual General Meeting presentation (from about 8:24):
https://www.youtube.com/watch?v=zkB8BvaYA_Q

I did look through the BTEM Japan holdings (which I presume will be at the core of AJOT) and there did not seem to be much if any overlap with BGS.

I’m not necessarily going to invest in AJOT, but will certainly explore it in greater depth between now and the mid-October closing date.

Favourable Money Week article about AJOT here:
https://moneyweek.com/495140/where-to-find-japans-small-cash-rich-bargain-stocks/


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