James Carthew: Two Japanese trusts that will thrive regardless of Trump’s tariffs
Fresh from a recent trip to Japan, our columnist highlights two trusts that have generated attractive returns, even when faced with a lacklustre economy.
I recently returned from a great holiday exploring Japan. Of course, you can only get a superficial impression of a country in a couple of weeks, but crowded shops, amazing infrastructure, and the sheer scale of industrial facilities suggest that its economy is thriving.
Having said that, predictions from the International Monetary Fund (IMF) suggest that Japan’s GDP will grow by only 0.6% this year and next, allowing India to overtake it as the world’s fourth-largest economy. The Bank of Japan concurs, it thinks trade uncertainties will shave about 0.9% off its GDP growth potential over the next couple of years.
Domestically-focused businesses and consumers are adapting to a new environment of inflation, wage rises, and positive interest rates. However, Trump’s tariff policies and their potential impact on global demand have been the main driver of the recent volatility of Japan’s stock market. This has created a challenging backdrop for fund managers.
Amongst Japanese large cap focused trusts, the standout winner has been JPMorgan Japanese (JFJ). It has generated NAV and share price returns north of 14% over the past 12 months, well ahead of the next best trust, Baillie Gifford Japan (BGFD), which has only generated returns just shy of 3%.
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