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Japan Set to Stage a Rebound: 3 Mutual Funds to Buy
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For the first time in two years, Japan’s economy slipped in the first quarter due to an unforeseen decline in capital investment and private consumption. However, economists believe that this contraction is temporary and a rebound is in the cards. Also, demand for capital goods is expected to boost exports.
Growth in Japan’s manufacturing activity surged in April, while its resilience to economic downturn will surely bolster the overall growth in the Asian country. Given such circumstances, investing in mutual funds from Japan seems prudent.
Economic Slowdown in Japan
Japan’s economy dwindled 0.2% quarter over quarter in the January-March period, putting an end to eight straight quarters of economic expansion. The economy shrank 0.6% on an annualized basis, more than the estimate of a 0.2% decline.
The slower growth came on the back of an unexpected decline of 0.1% in capital investment. Private consumption remained flat in the first quarter after a 0.2% rise in the final quarter of 2017.
However, economists strongly believe that this slowdown is temporary. According to Toshimitsu Motegi, Japan’s Economy Minister, the government still expects that a moderate recovery of the economy is highly possible in the days to come. The ministry expects a boost in private consumption and capital expenditure to drive the economic recovery.
Other Factors Which Would Boost Growth
Analysts and economists believe that overseas factors will hold the key to Japan’s economic growth. According to the International Monetary Fund (IMF), the global economy is expected to grow 3.9% in 2018 -- its fastest pace since 2011. This is likely to give a boost to Japan’s exports.
Japan’s Manufacturing Purchasing Manager’s Index increased 53.8 in April, marking the 21st consecutive month of rising production in its manufacturing sector. Moreover, industrial output is expected to increase 3.1% in April. Also, inventories of electronic parts like flat panel displays and semiconductors rose 12.8% in March compared with 1.7% in February.
3 Best Mutual Funds to Buy Now
Given such positives, we have highlighted three Japan mutual funds poised to gain significantly from the country’s burgeoning economy and resilience to uncertainties. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Japan (FJPNX - Free Report) seeks long-term capital growth. The fund invests a large portion of its assets in securities of companies in Japan. FJPNX invests in common stocks of companies that are influenced by economic conditions of Japan.
This Sector - Japan – Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FJPNXhas a Zacks Rank #1 and an annual expense ratio of 0.82%, which is below the category average of 1.26%. The fund has three and five-year returns of 9.4% and 6.7%, respectively.
T. Rowe Price Japan (PRJPX - Free Report) seeks capital appreciation for the long run by investing the majority of its assets in securities of companies which are based in Japan. PRJPX invests in various Japanese companies and industries, irrespective of their size.
This Sector - Japan - Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRJPXhas a Zacks Rank #2 and an annual expense ratio of 0.97%, which is below the category average of 1.26%. The fund has three and five-year returns of 14.8% and 11.1%, respectively.
Hennessy Japan Investor (HJPNX - Free Report) seeks appreciation of capital in the long run. The fund invests the majority of its assets in securities of companies from Japan. HJPNX is a diversified fund and invests in a variety of assets.
This Sector - Pacific Rim-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
HJPNXhas a Zacks Rank #2 and three and one-year returns of 14.4% and 13.9%, respectively.
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Japan Set to Stage a Rebound: 3 Mutual Funds to Buy
For the first time in two years, Japan’s economy slipped in the first quarter due to an unforeseen decline in capital investment and private consumption. However, economists believe that this contraction is temporary and a rebound is in the cards. Also, demand for capital goods is expected to boost exports.
Growth in Japan’s manufacturing activity surged in April, while its resilience to economic downturn will surely bolster the overall growth in the Asian country. Given such circumstances, investing in mutual funds from Japan seems prudent.
Economic Slowdown in Japan
Japan’s economy dwindled 0.2% quarter over quarter in the January-March period, putting an end to eight straight quarters of economic expansion. The economy shrank 0.6% on an annualized basis, more than the estimate of a 0.2% decline.
The slower growth came on the back of an unexpected decline of 0.1% in capital investment. Private consumption remained flat in the first quarter after a 0.2% rise in the final quarter of 2017.
However, economists strongly believe that this slowdown is temporary. According to Toshimitsu Motegi, Japan’s Economy Minister, the government still expects that a moderate recovery of the economy is highly possible in the days to come. The ministry expects a boost in private consumption and capital expenditure to drive the economic recovery.
Other Factors Which Would Boost Growth
Analysts and economists believe that overseas factors will hold the key to Japan’s economic growth. According to the International Monetary Fund (IMF), the global economy is expected to grow 3.9% in 2018 -- its fastest pace since 2011. This is likely to give a boost to Japan’s exports.
Japan’s Manufacturing Purchasing Manager’s Index increased 53.8 in April, marking the 21st consecutive month of rising production in its manufacturing sector. Moreover, industrial output is expected to increase 3.1% in April. Also, inventories of electronic parts like flat panel displays and semiconductors rose 12.8% in March compared with 1.7% in February.
3 Best Mutual Funds to Buy Now
Given such positives, we have highlighted three Japan mutual funds poised to gain significantly from the country’s burgeoning economy and resilience to uncertainties. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Japan (FJPNX - Free Report) seeks long-term capital growth. The fund invests a large portion of its assets in securities of companies in Japan. FJPNX invests in common stocks of companies that are influenced by economic conditions of Japan.
This Sector - Japan – Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FJPNXhas a Zacks Rank #1 and an annual expense ratio of 0.82%, which is below the category average of 1.26%. The fund has three and five-year returns of 9.4% and 6.7%, respectively.
T. Rowe Price Japan (PRJPX - Free Report) seeks capital appreciation for the long run by investing the majority of its assets in securities of companies which are based in Japan. PRJPX invests in various Japanese companies and industries, irrespective of their size.
This Sector - Japan - Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRJPXhas a Zacks Rank #2 and an annual expense ratio of 0.97%, which is below the category average of 1.26%. The fund has three and five-year returns of 14.8% and 11.1%, respectively.
Hennessy Japan Investor (HJPNX - Free Report) seeks appreciation of capital in the long run. The fund invests the majority of its assets in securities of companies from Japan. HJPNX is a diversified fund and invests in a variety of assets.
This Sector - Pacific Rim-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
HJPNXhas a Zacks Rank #2 and three and one-year returns of 14.4% and 13.9%, respectively.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>