With a gain of just 2.09% the IA Japanese Smaller Companies sector was the best performing peer group over the period 1 November to 1 December, followed by the wider Japan sector in which the average fund registered a 1.09% positive return.
In October, IA Japan trailed the IA Technology & Telecommunications sector into second place, after rising 5.74%. Year-to date meanwhile, the Japan sector is up 16.58%, which is behind the Japanese Smaller Companies mean return of 22.85%.
Overall, three of the top five funds in November were Japanese invested, with Hideo Shiozumi’s Legg Mason IF Japan Equity Fund leading the way with a 6.18% gain, according to FE Trustnet.
With a return of 5.99% the Baillie Gifford Japanese Smaller Companies was the second best performer, while the First State Japan Focus Fund also made the top five with a monthly rise of 4.27%.
“It is always a sign of a strong Japanese market when Legg Mason Japan tops the tables,” said Ben Yearsley, a director at Shore Financial Planning. “Though to be fair, the boom and bust nature of this fund a decade ago has largely disappeared and it has been far more consistent in recent years.”
As an aside, Yearsley noted that Shiozumi believes the Nikkei could hit the 30,000 mark in the next few years which, if correct, he said would make Japan hard to beat (it closed Friday at 22,819).
“Japan has been a favoured area of investment for me for many years now and despite the good run in the markets, it remains one of the cheapest developed markets,” Yearsley added. “While other markets including the US reach all time highs, Japan has to make do with 20-year highs as it is still almost half of the peak of 1989. I’m still a buyer of Japanese equities.”
Outside of Japan, the North America (0.92%) and North America Smaller Companies (0.71%) sectors delivered the next strongest gains, while with a fall of 2.05% the European Smaller Companies took the unwanted honour of being the worst performing peer group for the month.
The worst performing fund for November, with a 13.17% fall, was the Schroder Advanced Beta Global Equity Value Fund, followed in second place by the Manek Growth Fund which was down 8.85%.
For Manek Growth this could be the last time the fund appears at the bottom of the performance tables, after Portfolio Adviser revealed that it is closing, a move welcomed by Yearsley.
“With over 2,500 funds onshore in the UK, there is definitely too much mediocrity, therefore it is pleasing to see one of the poorer funds close,” he said. “If only more fund groups closed poor active funds the active industry may have a better chance of putting a stronger case for investing in active over passive.”
