16-02-2025
‘I invest £2.5bn in the world's most surprising economy'
Fund Of The Week quizzes fund managers about how they're investing your money. If you'd like to suggest which funds you want to hear about and pitch your questions to the managers, sign up to the Investor Newsletter here for more details.
After decades of deflation and economic stagnation, Japan has reached an inflection point.
The Bank of Japan has raised interest rates twice since July to around 0.5pc, marking a major shift from negative rates. At the same time, corporate governance reforms are finally gaining traction. These initiatives encourage listed Japanese companies to improve shareholder returns by investing for future growth and distributing the cash they have hoarded for many years.
Emily Badger, who co-manages the Man Japan CoreAlpha fund alongside Jeffrey Atherton, Adrian Edwards and Stephen Harget, believes corporate governance improvements are a major boon for investors looking to snap up cheap Japanese shares.
She explains why Japanese car makers look attractive, even though the sector is overshadowed by the threat of President Donald Trump's tariffs. The fund manager also tells Telegraph Money why Japanese property companies, like Mitsubishi Estate, look cheap.
Over the past three years, the Man Japan CoreAlpha fund has returned 44pc versus a sector average 20pc offered by rivals.
How do you invest?
We have a value tilt and take a contrarian approach to investing in Japanese large caps. We go against the herd and invest in stocks that are unfashionable, where we think valuations look excessively depressed. We look to buy assets the market wants to buy, they just don't know it yet.
What is your outlook for Japanese car makers?
We are optimistic about the auto sector. Last year, concerns about increased competition from China and the potential impact of tariffs weighed heavily, so with that in mind, we felt it was one of the most contrarian areas within the Japanese market and therefore a big opportunity. For example, in August of last year, we built a position in Toyota [which is held alongside Honda and Nissan].
