Ruffer Investment Company has bulked out its holding in Japan, piling into life assurance, property and business-to-business stocks.
The specialist global growth trust, which in June outperformed its benchmark by more than 2%, indulged in an aggressive Japanese spending spree, buying into T&D life assurance, JRIC property and NTT Data.
Managers Jonathan Ruffer and Steve Russell have grown their exposure to the region to 20%, ahead of an anticipated loosening of the local currency the Yen.
‘This has become a biggish theme in the portfolio and we are confident that a decision by the Bank of Japan to introduce a policy of easing is not far away,’ the pair explained in investment company’s monthly update to shareholders.
‘The weakness of the Japanese stocks, which has caught us out in the last couple of months, was largely due to owning high-beta stocks at a time when we thought this initiative would already have been introduced but it wasn’t.
'There is such a strong culture against currency compromise, and this, combined with a naturally conservative mien has meant that short of a deflationary crisis, this will not happen. This is precisely what we think we are headed for,’ the pair continued, adding that it was crucial to monitor the dollar-yen exchange rate.
'We think if it gets to 85¥, this is what will happen. At the moment it is 87.5¥, up 6% year to date, and a great worry for the Japanese authorities. This initiative should result in a weakening currency, a steepening yield curve and a sharply rising stock market.
We would expect these financials to move, if not to a "double" then something not dissimilar, in a matter of weeks. If we are right - and it is, of course, an "if" - it is best to be in them too soon than too late.'
Over the month up to 30 June, Ruffer Investment Company dropped 2% versus a fall of 4.6% by the FTSE All Share Index.