Invesco Perpetual Japan (Isin: GB0033028118) was the worst performing fund over the third quarter out of 1,231 in 12 main market fund sectors surveyed by F&C Investments. The fund fell 10.9 per cent during this period due to having the wrong investment style for current market conditions.
The fund's performance has struggled for a while. It is in the bottom 25 per cent of funds in the Investment Management Association's Japan sector over one and three years, and failed to beat the Topix index over these periods.
However longer-term the fund has done better, placing it in the second quartile over five years during which time it also beat the index and sector average. It is well regarded by fund analysts and has a Gold rating from S&P Capital IQ and Bronze rating from Morningstar, while broker Hargreaves Lansdown continues to include it in its list of 150 preferred funds on the grounds that it can "achieve attractive returns for long-term investors."
Tony Roberts, Japanese equities fund manager at Invesco Perpetual says: "Since the collapse of Lehman Brothers Japan's economy and corporate sector have seen healthy recoveries. However, this has not been reflected in share prices. Our export related holdings have detracted from fund performance, with investors generally favouring companies with more defensive and transparent earnings.
"However, we felt that the disparity in valuation between these companies and the cyclical areas we favour was too high, and this valuation gap has widened recently. While this has been a difficult period, we remain focused on investing for the medium to long term and in the companies where we see the most compelling valuations. We have a constructive view on the outlook for the Japanese market and believe that as investors become more comfortable with the low, but sustainable growth outlook their confidence in an earnings recovery will improve. As such, we remain positive on fund's longer term prospects."
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