e-fundresearch.com: What are your personal lessons learned from 2014 market developments?
Ruth Nash: There were clear signs last year that overseas investors were losing interest in the remarkable reforms under way in Japan as part of the ‘Abenomics’ programme. The tendency for global investors to have limited patience and scant faith in the Japanese market is certainly not a new phenomenon. And investors’ impatience is understandable – we’re all familiar with the market’s numerous false dawns down the years. But, at the risk of uttering that dangerous phrase “this time it’s different”, we do think ‘Abenomics’ is a game-changer. ‘Abenomics’ could do for Japan what ‘Reaganomics’ did for the USA in the 1980s. Nevertheless, last year’s mixed market performance and sentiment served as a reminder that scepticism towards Japan Inc. runs deep.
e-fundresearch.com: With regards to the new year 2015: How optimistic is your view into the future and what obstacles and challenges should investors be prepared to overcome in 2015?
Ruth Nash: As is clear from my earlier answer, we remain very upbeat about the prospects for Japanese equities. There are exciting changes happening at Japanese companies, institutional investors are finally returning to the stock market, fiscal and monetary policy are very supportive and valuations are close to record lows. This is the time for exuberance about Japan.
e-fundresearch.com: Why should investors consider an increase in allocation to your asset class and, more particularly, your product in 2015?
Ruth Nash: We have long believed that we need to see sustained interest from domestic investors and a dividend culture emerge if a multi-year bull market in Japanese equities is to take hold. That dividend culture is, in our opinion, starting to take to root, hence our decision last year to launch the JOHCM Japan Dividend Growth Fund. The fund incorporates a blend of dividend growth and dividend yield and focuses on the largest 200 companies in Japan.
Corporate Japan is starting to return some of its cash pile to shareholders. Many companies increased dividends last year and have said they will raise them further this year. With balance sheets full of cash and no longer protected by the old cross-shareholding system, companies are realising that, if they are not to be taken over, they need to keep their shareholders happy. They are also being pressed to increase dividends by domestic shareholders and by the Japanese authorities.
