Coombs is comfortable that there is further upside to come even though the asset class has seen a 32% rise over the past year, if the IA Japan sector is your yard stick.
Rathbones’ exposure comes primarily through investment trusts, with managers who are targeting the upside stemming from ongoing Japanese corporate reform preferred.
“We remain comfortable with our exposure to Japan, and are keeping our positions steady. We hold the Baillie Gifford Shin Nippon, JPMorgan Japanese and Coupland Cardiff Japan Income & Growth investment trusts,” Coombs said. “The funds have done extremely well over the past year, regardless of the wider market volatility.”
“We’ve chosen managers who share our enthusiasm for Japanese businesses that are transforming, or have already transformed, into shareholder-focused enterprises,” he continued. “For decades, Japanese companies have been run for the benefit of employees and executives, but that is now changing. Many companies are showing radical improvements in return on equity as a result of this corporate governance revolution. Further, the mountainous cash piles accrued by these companies have started to flow to investors through record dividends and share buybacks.”
Coombs also noted that the Bank of Japan’s commitment to buy equity ETFs worth trillions of yen, and recent hints of boosting that higher, will support markets as well.