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Sell-off creates perfect opportunity to buy Japanese funds and trusts

James Crux, Shares Magazine, 14 July 2022:

Long-term investors in Japanese shares have endured several false dawns since the country’s Nikkei 225 stock index peaked at above 38,900 points in 1989.

At the time of writing, the Nikkei 225 sits at the 26,393 mark, about 15% off its autumn 2021 one-year peak of 30,670 and down 9.9% year-to-date.

Yet this looks an exciting time to invest in Japan where shares are attractively valued relative to global peers and companies are paying more attention to improving shareholder returns and thinking harder about where they spend money.

Activist investors are pushing hard to accelerate positive corporate change through engagement with management, a strategy pursued by London-listed investment trusts such as AVI Japan Opportunity (AJOT) and Nippon Active Value Fund (NAVF).

Japan is undergoing a major technological transformation that should deliver growth and substantial productivity gains over time, with automation among the themes exciting investors.


Having fought a long battle against deflation, Japan is sticking by its ultra-easy monetary policies in a decision which has sent the yen plunging against the dollar, boosting prospects for exporters…


‘There’s a few misconceptions about the Japanese market that may be leading to the undervaluation,’explains Andy McCagg, senior client portfolio manager at Nomura Asset Management UK…

His enthusiasm is shared by Tokyo-based Nicholas Weindling, portfolio manager of investment trust JPMorgan Japanese (JFJ), who is also positive about Japan’s longer-term outlook…

James Carthew, head of investment companies at research group, QuotedData, says the real change in Japan, and one that has accelerated recently, has been in the pace of shareholder-friendly actions.

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