The latest: GLG Japan CoreAlpha

Following a stellar year for Japanese equities’ in 2013 when the Topix 100 TR index increased by 54 per cent in local currency terms, fortunes seem to have turned against the market in 2014.

However, many believe that economic activity and growth are improving as Prime Minister Abe’s policies aiming to reduce the budget deficit and national debt and boost the economic recovery begin to take effect. They also think that recent market weakness is potentially just a blip as investors focus on the uncertainty surrounding the increase in consumption tax with effect from April.

These uncertainties may be warranted as the last time the consumption tax in Japan was increased in 1997, from 3 to 5 per cent it sent the economy back into recession, and while expectations are for a slowdown in second quarter GDP, compensating for the front loading prior to the hike, the government will be keeping a close eye on quarter three data.

Investors looking to gain exposure to Japan may wish to consider the GLG Japan CoreAlpha fund. The fund is managed by veteran manager Stephen Harker, and invests mainly in large Japanese companies.

The strategy has a distinct value bias, meaning the fund seeks companies that are trading below their “correct” valuation, rather than high growth companies.

Harker argues that among developed markets, there is strong evidence that value investing is the most successful style.

Top holdings in the fund include a number of well-known names such as Sony, Canon Inc and Nintendo.

This strategy is also available through the GLG Japan offshore range, which includes hedged share classes for investors who wish to explicitly remove the effects of currency fluctuations.

This fund is rated 5 stars by Bestinvest.

Sophie Muller is research analyst at Bestinvest

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