3 Japan Funds to Gain From a Robust Economy – May 24, 2019

Japan has showcased resilience in times of global economic slowdown. Its first-quarter GDP nudged up, putting to rest speculation about an impending slowdown in the third-largest economy of the world.

Further, unemployment rate is near a four-decade low. Also, influx of money into the economy in the form of business and capital spending coupled with business-friendly economic and monetary policies has been pivotal in boosting Japan’s economic growth.

Such developments indicate that economy is treading on a steady path in the land of the rising sun. Such encouraging conditions call for investing in mutual funds with significant exposure to companies domiciled in Japan.

Japanese Economy Surpasses Estimates in Q1

Per the latest data released by Japan’s Cabinet Office on May 20, the country’s gross domestic product (GDP) increased at an annualized rate of 2.1% in the first quarter of 2019. The metric beat expectations of a contraction of 0.2%. Economists believe that the growth in GDP got a boost primarily because Japan’s imports fell faster than its exports.

Per Marcel Thieliant, Japan economist at Capital Economics, Japan’s resilience to global economic downturns in the first three months of 2019 implies that its GDP growth is likely to remain strong for the remaining part of this year.

A Plethora of Investment Opportunities

Japan remained as one of the most preferred places for investing in recent times. The Investment Association (IA) Japan fund sector has returned 76.7% on average over the past five years. Furthermore, The IA Japanese Smaller Companies sector turned up as one of the best-performing sectors with an average return of more than 100% over the past years.

Fund managers have stated that two of the top-performing funds from the country, Viz., Legg Mason IF Japan Equity and Lindsell Train Japanese Equity have returned more than 200% and 100%, respectively in the past five years.

3 Best Fund Choices

We have, thus, selected three Japan mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

ProFunds UltraJapan Fund Investor (UJPIX Free Report) seeks daily investment results that correspond to twice the daily performance of Nikkei 225 Stock Exchange. The non-diversified fund invests in financial instruments that ProFund Advisors feel will produce daily returns consistent with the fund’s objective for investment.

This Sector – Japan – Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

UJPIXhas a Zacks Mutual Fund Rank#1 and an annual expense ratio of 1.66%, which is below the category average of 2.05%. The fund has three and five-year returns of 22.4% and 14%, respectively.

T. Rowe Price Japan Fund (PRJPX Free Report) seeks capital appreciation over the long run by investing the majority of its assets in securities of companies based in Japan. PRJPX invests in various Japanese companies and industries, irrespective of their size.

This Sector – Japan – Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PRJPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.95%, which is below the category average of 1.27%. The fund has three and five-year returns of 12.5% and 10.6%, respectively.

Matthews Japan Investor Fund (MJFOX Free Report) aims to gain capital by investing the majority of its net assets in the preferred and common stocks of companies located in Japan.

This Sector – Japan – Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

MJFOXhas a Zacks Mutual Fund Rank#2 and an annual expense ratio of 0.91%, which is below the category average of 1.27%. The fund has three and five-year returns of 7.2% and 9%, respectively.

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