By Robert Stock The sharp correction in Japanese tech stocks has radically altered the unit trust pe...
By Robert Stock
The sharp correction in Japanese tech stocks has radically altered the unit trust performance rankings short term.
The most obvious change was S&P Japan Growth which was top of its sector on a bid to bid basis between 17 January and 14 February, up 12.63% but came bottom out of 77 between 14 February and 13 March, down some 11.77%, according to S&P Micropal.
This has been the most extreme example of the turnaround in short term leadership but was far from the only one. Schroder Japanese Enterprise was ranked third during January/February up some 11.37%, but is ranked 76, down 11.61% the following month.
Chris Tracey, investment director at Flemings, said that the S&P Japan Growth Fund had a 50% to 60% exposure to tech stocks which was why it had dropped down the rankings but he said that the fund had already made a substantial recovery.
Tokyo-based Jonathan Bolton, assistant director at Schroder Investment Management, said that the Schroder Japanese Enterprise fund had around 90% exposure to tech stocks. He cited Hikari Tsushin, Sony, Mabushi Motor, Tokyo Electron and Tokyo Broadcasting as being some of the big holdings that have hurt performance on the portfolio recently.
The most dramatic changes were between 1 March and 14 March. During this period Hikari Tsushin dropped some 58%, Softbank fell 43% while Sony came down 23% and NTT DoCoMo fell 12% although it fully recovered its losses by the end of last week. The other three have all bounced back although to a lesser extent.
By contrast the Scottish Equitable Japan Oeic was ranked six over the January/February period but rose to top spot for the February/March period.
Matthew Harris, head of the Japan desk at Scottish Equitable Asset Management, said the portfolio had taken profits in a number of overvalued new Japan stocks, including Softbank and Hikari Tsushin prior to the fall. Since the fall, the tech sector has rallied strongly.
This has reinforced the belief that the collapse was largely caused by panicked Japanese margin traders reacting to end-of-year stock sales by corporations, Sony's faltering Play Station Two launch, and rumours about Softbank and Hikari Tsushin in Japanese tabloids. Harris warned that fund managers must look much more closely at individual stocks in order pick out the thoroughbreds among New Japan stocks, and just as crucially, the Old Japan stocks that are making the cross-over into e-commerce and other newer technology.
He said: "Too many fund managers have stuck too doggedly to the stocks they made a lot of money on last year. But where we have made our money this year is by looking towards older Japan, but older Japan which is making the crossover to newer tech."
Industry Voice: Scottish Widows pension expert Robert Cochran and economist Andrew Scott discuss the future of employment and income, in episode three of Scottish Widows' podcast series.
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