Japanese Equities Rated Funds

Japan is the world's third-largest economy after the US and China, and boasts the second largest stock market in the world by market capitalisation. After decades of anaemic expansion, its domestic economy is thought to be on the point of lift off.

The global economy looks healthier than it has for some time. Japan is a very cyclical economy and its stock market's performance is highly correlated to how well the rest of the world is doing.

Prime minister Shinzo Abe enjoyed a landslide victory in the 2017 election and has a clear mandate to go on with his 'three arrows' of reforms designed to stimulate the economy – monetary easing, fiscal stimulus and structural reforms.

Despite having performed strongly in recent years, shares in Japanese companies also appear to be relatively good value compared with other developed markets. Taken together, the attraction of the market is clear.

Although many of Japan's corporate giants are well-known to foreign investors, its smaller and medium-sized companies receive scant investment research coverage. This part of the market is where some of the strongest gains can be made.

Our nine actively managed choices include three investment trusts and six funds. Many are focused on smaller companies, while others back big brands and leading global businesses. There is also an income-focused option, while a further three passive fund options make up the list.

JAPANESE EQUITIESBrowse other rated fund groups
Fund & Sector
Rated Funds Group
1 Month Perf.
1 Year Perf.
3 Year Perf.
5 Year Perf.
Baillie Giff Shin Nippon PLC
IT Japanese Smaller Companies
View Factsheet
JAPANESE EQUITIES-2.9%
3 / 4
49.3%
1 / 4
137.4%
1 / 4
226.7%
1 / 4
Legg Mason IFJaEq
UT Japan
View Factsheet
JAPANESE EQUITIES-4%
48 / 48
32.9%
1 / 45
139.8%
1 / 41
188.6%
1 / 38
Baillie Gifford Jap Tst PLC
IT Japan
View Factsheet
JAPANESE EQUITIES-2.2%
5 / 5
32.7%
1 / 5
72.2%
1 / 4
149.2%
1 / 4
JP Morgan Japanese IT plc
IT Japan
View Factsheet
JAPANESE EQUITIES-0.6%
2 / 5
32.3%
2 / 5
51.7%
2 / 4
109.2%
2 / 4
Lindsell Train Japnse Eq
FO Equity - Japan
View Factsheet
JAPANESE EQUITIES1%
81 / 113
23.8%
26 / 111
76.3%
2 / 97
115.6%
3 / 83
Baillie Gifford Japanese
UT Japan
View Factsheet
JAPANESE EQUITIES0.7%
29 / 48
20.8%
6 / 45
56.1%
5 / 41
106.8%
4 / 38
AXA Framlington Japan
UT Japan
View Factsheet
JAPANESE EQUITIES-0.7%
44 / 48
17.7%
10 / 45
64.6%
2 / 41
116.6%
2 / 38
LF Morant Wright Nippon Yield
UT Japan
View Factsheet
JAPANESE EQUITIES2.1%
6 / 48
14.7%
14 / 45
49.6%
6 / 41
93.6%
6 / 38
M&G Japan Smaller Cos
UT Japanese Smaller Companies
View Factsheet
JAPANESE EQUITIES4.1%
1 / 3
13.3%
3 / 3
63.6%
3 / 3
130.9%
2 / 3
Data provided by
Reviewed 01 April 2018

Rated Funds Update: Rated Funds 2018

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Review: first quarter of 2018

Japan’s benchmark Topix index was one of the stronger global equity markets in sterling terms, losing 2.6 per cent. 

Three Rated Funds with strong long-term records made meaningful gains in the first quarter and were the top three Rated Funds overall over the quarter. Legg Mason IF Japan Equity returned 10.7 per cent, the best performance among all actively managed Rated Funds over the quarter. 

Lindsell Train Japanese Equity also returned a very healthy 6.6 per cent.

The small-company oriented Baillie Gifford Shin Nippon trust continued its very strong run, returning 5.8 per cent. However, as we have previously cautioned, the trust continues to be quoted on a very high premium to net asset value (currently 11.8 per cent), despite the regular issuance of new shares to satisfy demand. We will continue to rate the trust, but highlight this high premium as potentially unsustainable should sentiment against the trust or Japanese equities change for the worse.

As with other asset groups, equity income strategies were not popular. Our income choice for this group, LF Morant Wright Nippon Yield fund, fell 6.1 per cent. Our open-ended smaller company choice, M&G Japan Smaller Companies, also had a comparatively bad quarter, down 5.9 per cent.

The strong team approach fostered by Baillie Gifford’s Japanese equities desk leads us to keep faith with Baillie Gifford Japan trust and Baillie Gifford Japanese following the anticipated and planned retirement of manager Sarah Whitley in April. The high premium on the trust may persuade investors to focus instead on the open-ended Baillie Gifford Japanese.

Premium watch: Baillie Gifford Shin Nippon and Baillie Gifford Japan 

View a full list of our Rated Funds 2018 here

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