Japan is Back in Fashion

Japan is Back in Fashion
Japan is beginning to come back into fashion with fund managers, after years of poor performance. Some are predicting that investors can earn bumper returns by investing in companies which are cutting costs and focusing on shareholder returns.

The moves by fund of funds executives at Gartmore and Credit Suisse Asset Management come after Japan bulls have argued that the country's consumers may be about to start spending, shares are cheap in cash flow terms and the economy may be about to recover.

The bulls' argument follows a prediction this summer from the Bank of Japan of a "strong recovery" a forecast which led many economists to conclude that the central bank was signalling an end to Japan's lost decade.

Bambos Hambi, head of multi-manager at Gartmore, favours Japan's stock market because he says its companies are focusing on shareholder value and its banks have acted on bad loans.

Such reforms have driven Hambi to push 15 per cent of Gartmore's Global High Alpha fund into Japan, well above its benchmark of 10 per cent.

Robert Burdett, who picks funds at Credit Suisse Asset Management, also believes that Japanese economic and corporate reform make this a good time to invest. He has 11.9 per cent of his Constellation fund in Japan, against a benchmark of 9.1 per cent.

Others argue that it must make sen