Japan investment trusts are largely outperforming open-ended funds, according to research company QuotedData. On average, Japan investment trusts focused on larger companies outperform open-ended Japan funds on an annualised net asset value (NAV) basis over one, three and five years. "We think the reason is that the managers of the investment companies are free to take a long-term view," says James Carthew, director at QuotedData owner Marten & Co.
Mr Carthew says that general factors that can help investment trusts outperform open-ended funds include the fact that they do not have to hold cash to meet redemptions, and they can take on debt, known as gearing, to enhance their returns by raising extra money to invest. This is helpful when the value of the assets they invest in rises, but conversely increases their losses in falling markets.
Japanese investment trusts investing in larger companies: NAV return