13 Aug

Portfolio Matchup of Japan-Focused Funds: PRJPX and FPJAX

WRITTEN BY David Ashworth FEATURED IN Macroeconomic Analysis


We noted earlier in this series that two of our Japan-focused funds—the T. Rowe Price Japan Fund (PRJPX) and the Fidelity Advisor Japan Fund (FPJAX)—benchmark their performance to the TOPIX Index. The remaining two—the Nuveen Tradewinds Japan (NTJAX) and the Matthews Japan Fund (MJFOX)—benchmark their performance to the MSCI Japan Index.

Let’s analyze the portfolio’s two funds that share a benchmark. First, let’s look at PRJPX and FPJAX.

Portfolio Matchup of Japan-Focused Funds: PRJPX and FPJAX

Portfolio composition

Both PRJPX and FPJAX are benchmarked to Japan’s TOPIX Index. While financials form the biggest holdings for FPJAX, PRJPX has maximum exposure to the industrials sector. On the other hand, the consumer discretionary sector is the largest component of the TOPIX index, followed closely by the industrials sector.

While PRJPX closely mirrors the TOPIX index in terms of exposure to the consumer discretionary and consumer staples sectors, it deviates from the index in the remaining six sectors. The fund is underweight in the financials and materials sectors, as compared to the benchmark. Plus, it is overweight in the healthcare, industrials, and telecom services sectors.

FPJAX has similar exposure to the financials sector as the benchmark, but it has a different level of exposure in all other sectors it has positions in. While it is underweight the consumer discretionary, consumer staples, and industrials sectors with respect to the benchmark, it is overweight in the healthcare, information technology, and telecom services sectors.

We saw in Part 2 of this series that PRJPX outdid FPJAX in terms of returns in the one-year period. That can be attributed to PRJPX’s higher exposure to the consumer staples and industrials sectors. Bridgestone Corp. (BRDCY), Don Quijote Holdings Co., Ltd. (DQJCY), and Honda Motor (HMC), contributed to the returns of PRJPX. The fund also invests in other popular Japanese companies like Sony Corp. (SNE), SoftBank Group Corp. (SFTBY), and Nippon Telegraph and Telephone Corporation (NTT).

In the next article, let’s look at the remaining two funds we’ve chosen for this series.

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