8 Sep

Why Did Japan-Focused Mutual Funds Fall Last Week?

WRITTEN BY David Ashworth FEATURED IN Macroeconomic Analysis

Funds under review

This series aims to assess the impact of economic indicators and analyze the performance of the following four Japan-focused mutual funds.

  • T. Rowe Price Japan Fund (PRJPX)
  • Fidelity Advisor Japan Fund – A (FPJAX)
  • Nuveen Tradewinds Japan – A (NTJAX)
  • Matthews Japan Fund – Investor Class (MJFOX)

We covered these funds in detail in our series An Analysis of 4 Japan-Focused Mutual Funds.

Why Did Japan-Focused Mutual Funds Fall Last Week?

Performance

3Q15 is turning out to be less than pleasant for Japan-focused mutual funds. In the week, month, and three months ended September 4, 2015, none of the four funds posted positive returns. NTJAX posted the least negative returns across all periods. The MJFOX was the most negatively affected in the week and month leading up to September 4, while FPJAX was the most negatively affected in the three-month period ended September 4.

NTJAX, which has outperformed the other three funds across all periods, includes NTT DOCOMO (DCM), Seven & I Holdings (SVNDY), and MS&AD Insurance Group Holdings (MSADF) as its top three picks, according to its July 2015 portfolio. These stocks made up 9.1% of the fund’s total assets for the month. FPJAX lagged its peers in the three-month period ended September 4 and posted the lowest returns in the year-to-date period. It counts Toyota Motor (TM), Nippon Telegraph and Telephone Corporation (NTT), and SoftBank Group (SFTBY) as its top three holdings, comprising 11.6% of its portfolio for June 2015.

From the beginning of 2015 until September 4, performance has been positive for all four of these Japan-focused mutual funds. However, there’s a clear divergence in their performance. While NTJAX is the only fund that has posted double-digit returns for this period, PRJPX and FPJAX are significantly behind the pack.

The primary reason for the recent fall in returns has been the sharp correction in Japanese equities due to fears of a slowdown in China—a major trading partner of Japan. Japan’s domestic economy also has yet to find solid ground.

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