HEAD-TO-HEAD: GAM vs JP Morgan

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Pictured above: Luke Ng, FE Advisory Asia

Investors in Asia-Pacific tend to look for growth equities, which often limits the universe to Asia-Pacific excluding Japan.

However, some analysts believe Japan has been gradually changing for the better since 2012, when Shinzo Abe’s “three arrows” — monetary easing, fiscal stimulus and structural reforms – defined the policy direction after two decades of economic stagnation. “Abenomics” has increased investor interest in Japan, Ng said.

State Street, for example, believes Japan has strong earnings fundamentals

and attractive valuations relative to other major  developed markets. In addition, the depreciation of the currency has helped Japan’s exporters.

Japanese equities are now supported by a positive macroeconomic backdrop, according to Rob Weatherston, Old Mutual Global Investors’ Hong Kong-based portfolio manager of the Old Mutual Japanese Equity Fund.

Japanese corporations are also being encouraged by the government to reform, which includes becoming more shareholder friendly by paying dividends and generally being responsive to investors.

However, some question the effectiveness of Abenomics. “Three years of Abenomics haven’t significantly changed the  economic  landscape  in Japan,” according to HSBC, which is comfortable with a neutral view on Japanese equities.

Views are divided. But at the end of the day, a Japan allocation in an Asia-Pacific fund can be an anchor or a motor, depending on how reforms play out.

Against this backdrop, Ng compares two Asia-Pacific including Japan equity products: the GAM Star Asia Pacific Equity Fund and the JP Morgan Pacific Securities Fund.

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