Many asset allocators put an overweight to Japan in place over the past year as they whittled down US, UK and emerging markets exposures.
The asset class has been volatile recently as can be seen below, but the allocation move has been a partial success so far, at least for those who made it in the first quarter of 2015 or before.
There was a significant wobble in August but that was in line with world markets and resulted from the turmoil in China’s stock market. There was however a significant climb back from late September on.
As this chart based on a survey of European asset allocators produced by our sister publication Expert Investorshows, few are planning to cut back anytime soon and significant numbers are planning to add to their Japanese equities weightings.
The question is, to what degree is this favouring of Japanese equities deserved based on its merits in isolation versus being a relative judgement based on unattractiveness of other developed market equities.
The corporate government reforms under way could be the key to how this story pans out.
