Japan Compares Favorably Among Countries Commonly Held In Foreign Funds

When looking at foreign countries that most commonly comprise foreign funds, Japan has performed well while continuing to offer compelling valuations. 

June 2021
  • Masakazu Takeda
    Masakazu Takeda, CFA, CMA
    Portfolio Manager

Outperformance Compared to Other Foreign Countries

Among the countries most commonly held in foreign funds, Japan has outperformed over the 10-year period.

Attractive Valuations

Japan’s valuations remain compelling on a price/earnings multiple based on 2021 forward earnings. 

However, we anticipate earnings could be unpredictable due to the pandemic environment, and therefore, price/book (P/B) metrics may more instructive. At 1.3x, Japan’s P/B is lower than that of many foreign countries. 

An Opportunity to Benefit

We believe Japan is home to some of the most globally competitive companies that have large moats, strong management teams, and good transparency. However, to access the best opportunities in Japan, we believe active managers with a deep understanding of the Japanese market and unique corporate culture are key. The Hennessy Japan Fund is sub-advised by Tokyo-based SPARX Asset Management Co., Ltd. With its decades-long relationship with Japanese corporate management and familiarity with the nuances of Japan, its “feet on the street” team provides a significant advantage for investors, as shown by the Hennessy Japan Fund’s outperformance over the TOPIX benchmark.

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To view the top 10 holdings of a Fund, please click the Fund name: Cornerstone Growth, Focus, Cornerstone Mid Cap 30, Cornerstone Large Growth, Cornerstone Value, Total Return, Equity and Income, Balanced, BP Energy Transition, BP Midstream, Gas Utility, Japan, Japan Small Cap, Large Cap Financial, Small Cap Financial, Technology. Fund holdings are subject to change and not recommendations to buy or sell any security.

Opinions expressed are subject to change at any time, are not guaranteed, and should not be considered investment advice.

News and Media Page:

To view the Morningstar ratings for the Japan Fund, please click here. (Media - TD Ameritrade)

To view the Morningstar ratings for the Focus Fund, please click here. (Media - CNBC-B. Macualey).

1 USD = 105.36 Yen as of 07/27/2020 (Media - Ticker - M. Takeda)

Tom White is a TD Ameritrade Network contributor and is not affiliated with the Hennessy Funds. Content is not investment advice, or a recommendation of any security, strategy, or account type. Options involve risks and are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses.(Media - TD Ameritrade-Rothberg)

To view the Morningstar ratings, please click here.

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