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3 Funds to Gain From Japan's Economic Resilience


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Japan has exhibited economic resilience amid downturns. The country's retail sales surged last December. Further, Japan's fourth-quarter 2018 GDP also nudged higher, following a sharp decline in the previous quarter.

Further, unemployment rate is near a four-decade low. Also, influx of money into the economy in the form of business and capital spending coupled with business-friendly economic and monetary policies has been pivotal in boosting Japan's economic growth.

Such developments indicate that Japan's economy is treading on a steady path. Under such circumstances, investing in mutual funds that track companies domiciled in Japan seems prudent.

Japan's Q4 GDP Rebounds

Per the lates t report s from Japan on Feb 13, the country's GDP increased at an annualized rate of 1.4% in the fourth quarter of 2018. Such growth followed a contraction of 2.6% in the July-September quarter of last year. Further, economists had expected the GDP to grow only 1.2% in the period between October and December.

Notably, private consumption increased 0.6% in the period, buoyed by an increase in household spending on traveling and eating out. Private consumption accounts for more than half of the country's economy. Further, capital expenditure for the period also increased 2.4%, boosted by impressive corporate earnings.

Consumer Spending Boosts Japan's Retail Sales

Retail sales of the world's third-largest economy increased 1.3% in the month of December. Such gains were buoyed by increased spending on consumer products like home appliances and clothes. The median estimate for the month was meager 0.8% growth.

Moreover, retail sales are an important indicator of the health of the Japanese economy. This is because private consumption directly impacts the metric and accounts for about 60% of the total Japanese economy.

3 Best Fund Choices

We have, thus, selected three Japan mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-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 ).

T. Rowe Price Japan  PRJPX seeks capital appreciation over the long run by investing the majority of its assets in securities of companies 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 .

PRJPX has a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.95%, which is below the category average of 1.27%. The fund has three and five-year returns of 12.6% and 8.7%, respectively.

Fidelity Japan  FJPNX 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 .

FJPNX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 1.04%, which is below the category average of 1.27%. The fund has three and five-year returns of 8.5% and 4.7%, respectively.

Commonwealth Japan CNJFX invests the lion's share of its assets in securities including depositary receipts and other derivatives that are issued in Japan. The fund seeks long-term appreciation of capital as well as current income.

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 .

CNJFXhas a Zacks Mutual Fund Rank #1 and three and five -year returns of 5.1% and 4.1%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Mutual Funds
Referenced Symbols: PRJPX , FJPNX , CNJFX




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