For the current market cycle 2012-09 until 2015-09, positions were held in Japan making up roughly 20% of the portfolio. For Portfolio Alpha, Fidelity Japan Smaller Companies Fund was chosen to capture this sector. For Portfolio Beta, Fidelity Japan Advantage Fund was used. As I am currently waiting data on Portfolio Beta, I will discuss Alpha’s position.
There are a few elements here to point out. The Nikkei (Fig. 1) shows a healthy move to the upside for the period 2013-06 until 2015-08. Fidelity Japan Smaller Companies Fund (Fig. 2) is approximately a direct relationship to the Nikkei during the same period. On my excel calculations (Fig. 3) here is an example of how I calculate the ROI for this fund: it has no regular contributions and we ‘dollar-costed’ in 5 switchings with an average entry price of 1397. We then decided to exit in one lot at 1872 leading to a completed ROI of 34% and at 20% holdings this leads to 6% being added to the portfolio gains during this period. That’s how real performance is calculated in my books, and I will be doing a webinar on this at some stage detailing other positions.
Click to Download: 2015-09 [Perf] Japan Smaller Companies Performance.pdf [575 KB]
Best,
Michael
Fig 1: Nikkei Performance 2013-06 until 2015-09 (Source: Stockcharts.com)
Fig 2: Fidelity Japan Smaller Companies Fund Performance (Source: Fidelity.com.hk)
Fig 3: Calculations illustrating dollar-cost average into this sector and one switch out for
Fidelity Japan Smaller Companies Fund
