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Where to invest - Japanese stocks?
Sarah Willis
Posted: 27 January 2014 16:08:02(UTC)
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I am currently looking to start my first stokes and shares ISA and wanted to hear what experience others had had with this type of investment. I have been taking a closer look at this on the Fidelity site https://www.fidelity.co....nfo/people-like-me.page and it seems ISAs are a popular choice among similar investors such as myself. There doesn't seem to be much investment in emerging markets and with shares in Japan looking to stay steady this may be an opportunity - http://www.theguardian.c...ets-new-year?CMP=twt_gu I am interesting in hearing from anyone who may have invested in Japanese stokes or other avenues you have chosen to invest funds.
Alan Selwood
Posted: 27 January 2014 17:26:36(UTC)
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I suggest you start with the basics, using a long-term good performer that is resilient, with at least a certain amount of global exposure, and when you have amassed a decent portfolio, start looking at the more adventurous and esoteric add-ons to give a wider spread for a smaller proportion of your total wealth. So I would tend to avoid going initially for emerging markets, mining stocks, banks, oils, clothing retailers, and other areas where the results could be excellent or dreadful.

Look for shares where the profit margins are good and preferably growing, the company borrowings are low and affordable, the dividends are around 2% rather than 0% or 5+%.

Or if you are feeling glassy-eyed at reading that, as most people are, use managed packages of investments where an experienced manager does the work in exchange for a cut. For example: Generalist investment trusts.(there are other options that are not related to shares alone, and normally I would suggest a spread of shares and other types of investment, but current market and economic conditions are a bit unusual)

Initially, I would suggest drip-feeding into your chosen vehicle, as it could be a difficult time to 'get the timing right' (of course it always is, but usually only in hindsight!).

So perhaps you could start with, for example (Do your own research, don't rely on idiots like us!):

A Monthly Savings input into an ISA run by or holding some general investment trusts like City of London, Lowland, Temple Bar, Scottish Mortgage and similar (have a look at the Morningstar guide to investment trusts on :
http://tools.morningstar.co.uk/uk/cefquickrank/default.aspx?Site=UK&Universe=FCGBR%24%24ALL&LanguageId=en-GB
(Look for those with a silver or gold rating initially)

Others, like micawber, will probably add more, so listen to what everybody says, then ask further questions, especially ones that seem 'dumb' or 'silly' because they always produce the best answers.

Good luck.
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Sarah Willis on 28/01/2014(UTC)
Sarah Willis
Posted: 27 January 2014 17:38:16(UTC)
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Thank you so much Alan for all your advice! Really appreciate it! I will have to re-read your post a few times but I think you're right in spreading shares across different markets. I may have been too brave going for an emerging market here,

I will do a bit more research and find a good investment trust as I think that's my safest bet for the moment as I get the hang of all this!

Thanks again though, will make sure to pop 'silly' questions on the post to you in the near future!
Micawber
Posted: 27 January 2014 17:43:10(UTC)
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Looks a good plan to me, Alan...... However, we don't know enough about Sarah's other holdings if any, attitude to risk, when the money might be needed for other things, aims etc.

With just one year's ISA allowance I think it's better to spread the risk through one or maybe two funds or trusts than to go direct into a very small number of individual company shares. For a first core holding a decent UK equity income and growth trust or fund is usually a sensible choice. The larger companies within its portfolio will give some international exposure.

Japan would be a bold ( = rather risky) selection (= gamble) for a new investor with no other equities, don't you think?

Remember, they can go up as well as down, and right now we need them to stop going down. But the point is, if going in for stocks or equity funds you must be prepared to let your investment stay there for a while as you ride the peaks and troughs, which can be rather large. Not good if you need the money at a fixed point in the near future.
Alan Selwood
Posted: 27 January 2014 23:43:29(UTC)
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I second everything that micawber says here. You appeared to have got to the point where equity investment was what you wanted to do, but if that's not the case, do start at the beginning, plan out what your timescales are, what risks you can take (how much can you 'lose' in terms of temporary or protracted drop in sale value before you get queasy; how much in terms of investment capital you could cope with losing permanently, without dragging your whole 'empire' down with it).

First rule of investing: "Don't lose money" (or as little as you can, to be realistic).
Second rule : read the first rule.

If markets appear to be volatile, with prices yo-yoing day by day, either sit on your hands till it goes quiet again, or buy a bit on the days when everyone is beset by panic and don't buy on the up days thinking that you'll miss the boat if you don't plunge in.

Also, consider breaking up your intended investment purchases into a series of chunks, perhaps the ISA annual allowance divided by 12, invested regularly on the same day every month for a year - this will help reduce extremes of overpaying and stock up extra value during the equivalent of the 'sales'.

Always have adequate cash in hand to tide you over for a while (possibly a year or two?) in case something expensive or unexpected crops up.

Try to secure the promised return where you can for the next slice after fulfilling the adequate amount of cash on easy access : normally I would have said gilts or National Savings Certificates, but the former are dear and the latter not on sale, so possibly a higher allocation of cash to compensate; only then do you go into share-based investments, preferably by having a decent spread of risk (this is where my investment trust ideas come into play).

I hope micawber will now approve my more detailed and I hope coherent suggestions re the order of priorities (No pressure, then!), but keep listening for other views, because it's all an inexact science.

2 users thanked Alan Selwood for this post.
Micawber on 28/01/2014(UTC), Sarah Willis on 28/01/2014(UTC)
Dian
Posted: 15 October 2016 03:33:45(UTC)
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I can remember many analysts were talking about Asia-Ex Japan and avoided Japanese market. It gave hefty returns over other Asian markets. Now it is having some volatility. At different time some market can give more return than other markets. For example UK market outperformed other European markets after Brexit referendum. Similarly, Pakistan Frontier market is one of the top performing markets in the world. When they were having array of worries, many investors avoided markets such Pakistan and Argentina. Some intelligent funds took positions in Pakistan before others. Emerging Indian market also rewarded investors.

How about Asian Frontier markets such as Vietnam, Sri-Lanka and Bangladesh? Investors and some funds have some great investment opportunities in those markets as well. For example some foreign investors and funds are buying stock and bonds in Asian region including countries such as Sri-Lanka and Bangladesh.Finally, investors are having great investments in markets such as New Zealand and Australia as well. It is same in the USA. By following and doing some research on few developed markets, emerging markets and frontier markets we will find some great investment opportunities. In the mean time Gold man prefer Asia-Ex-Japan market during remaining months of 2016.
S_M
Posted: 15 October 2016 07:41:26(UTC)
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In theory Japanese stocks should form a part of any balanced portfolio but as others have said there are many other considerations to take into account including your age, investment horizon, objectives (eg house purchase or retirement planning) and your attitude to taking on risky investments and any existing investments.

Looking back in time had you invested in a plain vanilla Japanese tracker, over the last 30 years you would have lost money. However, taking an actively managed approach there are two standout performers within the Japan sector. Legg Mason Japan and Baille Gifford Shin Nippon, both of which I hold for the longer term and have provided stellar returns over the last 10 years.

Who knows what the future holds, but I would trust my money with these two fund managers over a Japanese tracker fund any day.
King Lodos
Posted: 15 October 2016 09:18:16(UTC)
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I've never really held Japanese stocks – apart from a little in Ruffer.

Always had problems valuing the region.. It reached a record breaking CAPE ratio of 100 in 1989-90, and hasn't really been "cheap" since – by basic measures.

I'd have liked to be in Japanese Small-Caps in recent years, but Japan's basically 10-15 years ahead of us (in terms of demographics and being unable to stimulate its economy), while there are places like India where half the population haven't got a bank account yet, with much better demographics.
Keith Cobby
Posted: 15 October 2016 10:13:55(UTC)
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The Japanese government are busily buying shares so I expect the market to go higher there.
Dian
Posted: 15 October 2016 10:47:59(UTC)
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Keith Cobby;38421 wrote:
The Japanese government are busily buying shares so I expect the market to go higher there.


Yes. I agree with you. If they continue their buying, stocks will get boost.

http://www.cnbc.com/2016...e-program-for-etfs.html

Here’s how to play the Bank of Japan’s changes to its asset-purchase program for ETFs
andy
Posted: 16 October 2016 20:40:14(UTC)
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Sarah

Welcome to the forum

So notwithstanding what others are saying - if you are ready for the volatility that stocks and shares ISAs might throw at you (a lot of people suggest the market is expensive in everything at the moment) and you still feel you are ready for the plunge then I would consider looking at some reasonably conservatively run multi-asset funds / trusts. Making a big loss on your first investment early on can be scaring for life.

I would consider looking at things like

RIT Capital - run by Jacob Rothchild and is a large liquid investment trust
Seneca Global Income and Growth - small (so may have liquidity issues and as such may not be suitable) investment trust yielding about 4% - has lower volatility than average
City of London Investment Trust - UK focused equity income trust - has been growing income now for 50 years

If you prefer open ended I would consider looking at the Premier multiasset funds, the Hawksmoor funds and the Jupiter Merlin funds.

A lot depends on your personal circumstances - including age (and as such how long you have to be able to recover from a large loss), other investments and attitude to risk. Only you can really judge that.

I will say for the record that I hold some - but not all of the above.

As always be careful of people offering suggestions when you dont know their motives.

Andrew
Dian
Posted: 26 November 2016 19:04:51(UTC)
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Finally, Japan’s Nikkei hit a 10-month.

https://www.bloomberg.co...en-weakness-buoys-japan

Asia Stocks Post Best Week in Two Months as Weak Yen Buoys Japan
Dian
Posted: 12 February 2017 06:07:05(UTC)
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Can we expect similar return from Japanese market in 2017?
lynne shaffer
Posted: 12 February 2017 11:25:58(UTC)
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Who knows?!
Martina
Posted: 12 February 2017 21:04:27(UTC)
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Both Merryn Somerset Webb in a recent FT money supplement article and this Month’s Money Observer magazine have made good cases for running with dividend paying stocks/funds in Japan. From memory I think MSW may have mentioned Jupiter’s japan Income fund, it is also the only fund through Fidelity I can find that is a dividend paying fund. The MO feature highlights that Japans currency has weakened and authorities keep undermining it with quantitative easing but also goes on to say it can be volatile and timing it wrong can be the road to nowhere.
Abstract Artist
Posted: 13 February 2017 00:05:57(UTC)
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Martina,

Baillie Gifford launched a new fund last summer concentrating on dividend growth in Japan and it is available from Fidelity in Inc and Acc.

The Baillie Gifford Japanese Income Growth Fund

https://www.bailliegiffo...ese-income-growth-fund/

The fund is headed up by Matthew Brett and Karen See but of course it has the backing and use of resources of the most excellent BG Japan team, which to my mind are about the best in the business.

Also it has a most reasonable TER of 0.70%.

1 user thanked Abstract Artist for this post.
Martina on 13/02/2017(UTC)
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