A fully flexible way to invest
3 minute read
If you add up the total value of all the companies listed in Japan, it will rank second in size compared to all other regions around the world. But Japan is not always the second largest holding in investors’ portfolios. In fact, many investors have little to no exposure at all. Maybe a tracker fund is the ideal way to gain that exposure?
Who's it for? All investors
Japan – it’s the second largest stock market in the world, by size. But do you own a Japan fund in your investment portfolio? Probably not. So, once you’ve made the decision that you need a bit of Japan, to gain diversification, where do you start in looking for a fund that’s right for you? An attractive and simple way to start is to invest in a tracker fund.
The iShares Japan Equity Index Fund is a tracker fund, which means it aims to track the performance of the Japanese stock market, as measured by the FTSE Japan Index. The fund invests in the shares of about 500 Japanese companies, so it is well diversified. And, being a tracker fund, it’s operated automatically rather than by a fund manager, which dramatically reduces its running costs.
A very good question! For the last 30 years, Japan has suffered from deflation. This is where prices of goods and services fall over time, as compared to inflation which is where prices increase. One of the problems with deflation is that it encourages investors to remain in cash, because the value of that cash will be worth more in the future as prices of goods and services fall.
This results in less investment in businesses and fewer domestic investors buying shares. Over the last three decades, the Japanese stock market has underperformed many other markets around the world. Note that past performance is not a reliable guide to future performance.
But over recent years, we’ve seen some changes. We’ve seen political stability and the implementation of plans to revive growth in Japan and to modernise how businesses are run. The aim is to make investing in shares more attractive, as companies are being managed to focus more on shareholders. This comes at a time when shares in Japanese companies are relatively cheap compared to other markets around the world. Combine these two factors together and it could be an interesting time to consider investing in Japan for the first time.
The iShares Japan Equity Index Fund is a fund that gives you general exposure to the Japanese market. It could well be a fund worth looking at, if you are contemplating adding Japan to your investment portfolio.
If passive funds appeal to you, you may wish to look at the tracker funds in the Barclays Funds List. We have selected 12 tracker funds which allow you to track the performance of different investment sectors at a low cost. Find out more information on these funds.
The tracker funds on our Funds List are selected solely on cost – those featured are simply the cheapest available tracker fund we offer in each sector where a relevant product is available . The funds included in this selection are reviewed every six months, in June and December.
Correct at the time of publishing.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report for funds run by Barclays [PDF, 683KB] for funds run by Barclays..
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances. Smart Investor doesn’t offer personal financial advice. If you’re not sure about investing, seek independent advice.
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