Japan: Why it’s not so bad for investors

30th March 2011

Barrons blogger Murray Coleman notes that S&P is warning investors who are keen to jump into Japan that they need to be sure they are getting value.

Coleman notes that though investment sage Warren Buffett has said he sees a buying opportunity as the index is much lower, S&P is not so sure given the challenges Japan faces. S&P suggests that those looking at Japan should go for a broader approach perhaps by buying a global fund with some Japanese exposure.

Prior to this report, Market Watch reported record inflows of $11bn into Japan in the week of the 13th to the 19th  March.

Other fund firms continue to reassure investors in funds that already have substantial Japanese holdings.

Henderson Global Investors SRI funds have around 10 per cent due to a policy of maintaining a genuinely global investment approach with a regional allocation close to the MSCI World Index.

One stock the firm holds – JR East, the rail firm for Eastern Japan – has suffered damage to their track and is running a reduced service.

The share has been very volatile as a result. Tim Dieppe, Henderson Director of SRI Funds says: "We take the view that the fall in the shares was an overreaction as there is no significant structural damage to their infrastructure and the company does have considerable earthquake insurance."

The firm says its other holdings in Japan have not been significantly impacted and, whilst exhibiting volatility, have performed in line or better than the market since the earthquake.

Dieppe added: "We hold high quality companies in Japan which we are comfortable with and believe can continue to do well through and post this crisis. We have not made any adjustments to our Japanese holdings as yet, but for choice would consider adding to one or two names at this point."

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