| United Japan Growth Fund - What' |
May 2, 2000 |
| It was UOB Asset Management's st |
| Author : Wong Soo How |
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| The Rear View Looks Fantastic, But What's Up Ahead? |
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It was UOB Asset Managements best performing fund last year. The United Japan Growth fund racked up over 108% in returns. The Japan focused unit trust has registered three-digit growth rates for the last three years. However will that streak continue this year? Not likely, according to an interview with the companys Chief Investment Officer Daniel Chan.
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| Weighting In Technology Sector Reduced |
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In the last five months, returns have been in the negative territory as shown in the figures below.
1-month 2-month 3-month 4-month 5-month
-9.41% -21.11% -4.12% -14.29% -4.12%
Source: S&P Micropal
The funds performance was affected by the recent volatility in technology stocks according to Chan. Because of the huge correction in the technology sector in the US, that has affected the Japan fund as well. That sector was very strong last year, driving up many Japanese equity funds. Chan points out that so far, the impact on the Japan Growth Fund has been quite well controlled as his fund managers have taken some early action. He adds that the fund is now more broadly diversified and less focused on technology. In the technology sector, the representation would have dropped by a third, from about 35%-40% at the end of last year to about 25% now. As a result, the fund has increased its holdings in old economy stocks. Among the ones he favours are Sony, Toyota, Bank of Tokyo-Mitsubishi, pharmaceuticals, retail companies and those in the semi-conductor industry.
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| Japan Looks Good Ahead |
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Looking ahead, Chan is upbeat because recent economic indicators show the Japanese economy is on the recovery track. As for the impact from the political limbo in Tokyo following former Premier Obuchis coma, Chan notes: In Japan, its the bureaucrats that make decisions. The politics can come and go, but basic policies dont change very much. More important are the underlying economic fundamentals, interest rates, currency movements and the way corporations manage their business - whether they change or restructure. Those are more important factors.
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