Ameriprise Financial Abney Associates Advisory Team
JPM Fusion Growth: I still believe Japan really is on the mend, says fund boss
President Barack Obama wasn’t the only person to lend his backing to Japan last week, after he arrived in the country on the first leg of his Asia tour to show support over a land dispute with China.
Despite widespread cynicism over the ability of Japanese prime minister Shinzo Abe’s reforms – dubbed Abenomics – to boost the country’s fortunes, there is both political and investment support for the island nation.
Tony Lanning, manager of JPMorgan’s Fusion range – each product a ‘fund of funds’ investing in other investment vehicles – says he is bullish on Japan despite a ‘challenging start to the year’.
He acknowledges that euphoria over Abenomics has faded, regardless of last year’s 45 per cent rise in the Topix index, which reflects share prices on the Tokyo Stock Exchange.
Abenomics follows a ‘three-arrowed’ plan: to print money, aimed at boosting spending and weakening the yen to boost exports; to spend on construction; and make reforms and remove barriers that deter private investment.
Experts are concerned over the effectiveness of the last aim, but Lanning has faith and says wage rises are a signal of a turnaround.
He adds: ‘We retain conviction that Japan will reap the benefits of reform and are encouraged by signs affirming this.
‘Wage hikes are seen as key to boosting an economy which has been faced with falling prices for two decades and the recent round of union wage negotiations saw almost all companies in the bargaining process agreeing to wage increases, some for the first time since 2001.’
He manages five funds in the Fusion range – Income, Conservative, Balanced, Growth and Growth Plus, with an ascending level of risk. Within Fusion Growth, he highlights Polar Capital Japan and GLG Japan CoreAlpha as two funds he likes.
The first has exposure to small and mid-sized companies, while the second focuses on attractively valued big-cap companies, such as Sony. But a fifth of Fusion Growth is in UK equities and a quarter is in US shares. And though the percentage invested in Japan has risen, it is still only 8 per cent of the fund.
Each Fusion fund has so far performed in line with its risk profile, with higher returns for higher risks. But as they are only a year old, the funds have yet to prove themselves against rivals.