Investors are pulling out from Japan-focused equity funds globally, with the products having net outflows of $735m this year ending July, according to data from Morningstar Direct.
“We are seeing some outflows from the asset class this year, which is a continuation with what happened last year,” Samuel Lo, Hong Kong-based analyst for manager research at Morningstar, told FSA.
“One of the reasons is that the Japanese market has been trailing behind the world market. Especially after the Covid-19 meltdown, the rebound is much stronger for the global index.”
So far this year, the MSCI Japan Index continues to be in negative territory and has performed -1.39%, which compares with the positive 1.69% return of the MSCI All Country World Index, according to data from FE Fundinfo.
However, not all companies in Japan have performed negatively. For example, growth-oriented companies have provided at last high mid-to-high single-digit returns, with the MSCI Japan Growth Index performing 7.10% this year, FE data shows.
Against this backdrop, FSA asked Lo to compare two Japan equity products: The JP Morgan Japan Equity Fund and the Schroder ISF Japanese Equity Fund.
| JP Morgan AM | Schroders | |
| Size | $5.4bn | $1.6bn |
| Inception | 2002 | 2016 |
| Manager | Nicholas Weindling, Miyako Urabe, Shoichi Mizusawa | Kazuhiro Toyoda |
| Three-year cumulative return | 44.76% | 2.71% |
| Three-year annualised return | 13.17% | 1.00% |
| Three-year annualised alpha | 10.37 | -1.88 |
| Three-year annualised volatility | 19.39 | 18.67 |
| Morningstar analyst rating | Bronze | Neutral |
| Morningstar star rating | ***** | ** |
| FE Crown fund rating | **** | ** |
| OCF | 1.80% | 2.35% |
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