Japan has had several difficult years recently ' although the market has picked up of late and funds are starting to see a turnaround in terms of performance. The Standard & Poor's Japan sector update in September 2003 commented that the rally in the quarter to the end of July was driven by 'increasing confidence seen in the US, supported by better earnings results and higher GDP figures which has now shifted to Japan, is expected to participate in the global revival through increased exports.' In general, the analysts noted that fund managers are more positive about Japan because of this optimism for the US region, or confidence in the Chinese economy. 'As a result, most funds have increased their weightings in machinery, electronic appliances, steel and chemical companies,' the report noted.
The Invesco GT Nippon Enterprise fund invests in small caps, and has gained almost 60% during the last year. The fund has achieved first quartile performance in three of the last five years, though the other two periods saw fourth quartile returns. Standard & Poor's analysts put the disappointing relative returns down to 'the high level of performance volatility that characterises this fund. Much of the volatility can be attributed to the manager's keen adherence to quality growth stocks in times when growth was out of favour, which was particularly the case within small caps in 2002. It al...
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