Neil Veitch plans to maintain his significant underweight to Japan until the effects of country’s planned structural reforms become apparent.
Veitch’s £15.3m SVM World Equity fund currently has 3.8 per cent allocated to Japan, compared with the 7.96 per cent in the MSCI ACWI Investable Market Index benchmark. This is down from the 8 per cent the fund had in Japan at the end of January.
Japanese equities enjoyed a strong run earlier this year after an ambitious package of stimulus measures was unveiled to bolster the world’s third largest economy.
However, concerns over the future path of the US monetary policy led to a global sell-off, which saw Japan labelled as bear market after coming off more than 20 per cent since its peak.
Veitch says: “The potential volatility created by the introduction of aggressive policy stimulus was aptly demonstrated by this month’s significant sell-off in the Japanese market.
“As we had been cautioning, the vertiginous price action had left equities exposed to any change in sentiment. Our recent decision to significantly underweight Japan will likely remain until we see greater signs of structural reform.”
SVM World Equity’s cumulative performance to 20 June 2013
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Source: FE Analytics