Owning Japanese shares has been a disappointment for investors. The stock market has still not recovered from its 1989 crash. Its “old economy” financial and industrial stocks have been out of favour as investors flocked to more exciting technology businesses.
The £1.1bn Man GLG Japan CoreAlpha fund was launched in 1999 but has only doubled investors’ money. This beats the 60pc return from the average Japan fund, but remains far below the UK market, which has nearly tripled over the same period. US shares have more than quintupled in that time.
Finally, however, the tide could be about to turn as Japan’s cheap but profitable companies garner interest. The fund’s manager, Jeff Atherton, tells Telegraph Money why interest rate rises to bring down inflation around the world should allow the fund’s roaring start to the year, a rise of 7pc, to continue.
Who is the fund for?
We have both DIY and professional investors’ money in our fund. It’s for anyone who wants to own cheap, large Japanese companies that are due a turnaround.
How do you pick stocks?
Our core philosophy, which is unchanged in more than 21 years, is to be greedy when others are fearful. We take a contrarian approach to investing by buying stocks that have gone down a lot in price but don’t deserve to be so cheap.
Nothing goes into the fund unless it has returned 40 percentage points less than the index over four to eight years. Then we find out whether they can bounce back or whether they are cheap for a reason.
Once a company is in the fund, we wait for it to return to its fair price and then sell it. We are always looking for new ideas and don’t hold on to our winners if they bounce back, as we don’t want them to become expensive.