Fund investors not big on Japan

Stuart Welch, CEO, TD Direct Investing comments: "Investors were quick to act on warnings that Japan's economy may be shrinking last month. Three funds that specificaly exclude Japanese equities feature in TD's most popular fund tables for November, ahead of revised growth figures being issued indicating the country was in recession.

"First State's Asia Pacific Leaders A Fund, BNY Mellon Fund Managers' Newton Asian Income Fund and HSBC Investment Funds' Pacific Index Retail Fund feature in our clients' top 10 fund buys for November. Conversely, HSBC Investment Funds' Japan Index Retail Fund, which focuses on Japanese large-cap equities, was the fourth most sold fund.

"Japan is well known for being a major exporter of many of the goods and services every UK family has dotted around their home or garage - including household names such as Toyota, Sony, Nintendo, Nikon, Epson and Panasonic. The console market in particular should be at its most productive this time of year, and no doubt a few children will be hoping to unwrap Nintendo's newly launched Wii U console on Christmas morning.

"However, as people around the world have become more cautious in their spending this in turn has resulted in less demand for the very household names that Japan is known for exporting. Figures released last month showed that the Japanese economy shrank by 0.9% in Q3 (July-September), and last week the figures for Q2 were revised down from showing a 0.1% growth to a contraction of 0.03%. This revision effectively means the economy failed to grow for two quarters in a row, indicating the country was in recession.

"Japan's failing economy is top of the agenda for the newly elected Liberal Democratic Party (LDP), who were victorious over the governing Democratic Party at last weekend's parliamentary elections. It will be interesting to see if Japan's stimulus plans will help spread a little New Year joy and bring growth back to its flagging economy."