Mutual funds focused on Japan are popular and are at the top of the international list this year, according to Dow Jones.
Japanese stocks are still posting slight gains on average over the past 30 days, while all other major foreign mutual fund categories have been net losers, according to Morningstar.
“With the sell-off that took place in the last week, we’re looking to deploy new cash in Japanese companies that now look much more attractively prices,” said Uri Landesman, co-manager at ING International Fund.
The yen has shown strength against the dollar as Japanese short-term interest rates increased. Due to this, investors have shied away from many Japanese stocks, particularly blue chip companies tied to exports.
Landesman doesn’t see the yen or short-term rates skyrocketing in coming months. Also, he downplays how strict Chinese authorities will be about compressing foreign investment in the Chinese’s booming economy. That’s important to Japan’s prospects because the two are large trading partners.
However, “the challenge for Japan is that while the economy has recovered, the overall growth outlook still isn’t that exciting,” said Vincent McBride, co-manager at Lord Abbett International Core Equity Fund.
Many industries still remain in excess capacity situations, McBride said. One area he is keeping a close eye on is banking. “In Japan, there’s still more money to lend than there is to borrow,” he said. “So, banks are being forced to be more competitive with their rates.”
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.