This fund’s mission is to invest at least 80% of its net assets in Japanese equities. It’s top five holdings include Misumi Group Inc (MSUXF, 5.72% of assets); Terumo Corp (TRUMF, 5.43%); Asics Corporation (ASCCF, 5.40%); Ryohin Keikaku Co Lt (RYKKF, 5.17%); and Nidec Corp (NNDNF, 5.14%).
Hennessy Japan Investor (HJPNX)
from Moneyletter
We are advising Venturesome investors to increase their commitment to international stock funds. Specifically, we recommend that 10% of the Venturesome Portfolios be invested in a Japan fund. The fund we recommend for Moneyletter Venturesome investors is Hennessy Japan Investor (HJPNX).
Why Japan? It’s certainly is not because of the performance of the Japanese economy so far this year. But as Jeremy Schwartz, WisdomTree’s Director of Research wrote a few days ago, “When investors buy Japanese equities, they don’t really buy a slice of that economy; they buy shares in corporations that operate both in Japan and around the world. ‘Japan Inc.’ (i.e. Japanese corporations) is showing a profit picture that differs dramatically from the country’s economic growth rate.”
The Japanese economy has stagnated for years. The current Prime Minister, Shinzo Abe, was elected last year on a PRI Financial Publishing, Inc. 479 Washington Street P.O. Box 6020 Holliston, MA 01746 promise to turn things around radically. His extremely aggressive program—labeled Abenomics—had significant early success using a combination of monetary and fiscal stimulus.
However, the stimulus required heavy spending by an already heavily indebted Japanese government. In an effort ease the debt burden, the government introduced a two-part consumption tax; the first part took effect in April. The tax increase appears to have slowed down the ongoing recovery more than expected.
Consequently, Abe postponed the second part, dissolved parliament, and called for a snap election on Dec. 14. The purpose of the election is to prove widespread popular support for Abe’s policies. Abe is expected to win the election overwhelmingly.
At the same time as the postponement of the second round of the tax increase the Bank of Japan (BOJ) announced another huge stimulus program, including direct purchase of EFTs and REITs. The purpose of these moves is to continue the progress already made in breaking Japan’s deflationary psychology.
The attraction of Japan for us now is that the new powerful stimulus being applied will be supported by a positive endorsement from the voters. This will allow the Prime Minister and the BOJ to continue the stimulus and reform program. Japan Inc.’s profits have been growing and have been hitting new highs. And there is still room for Japan’s profit margins to grow, as contrasted to the very high profit margins here in the U.S. All in all, we believe Japan represents an attractive investment for Venturesome investors at this time.
Walter Frank, Moneyletter, www.moneyletter.com, 800-890-9670, December 2014