Japanese exposure drags sector returns down

Political and interest rate concerns cause Japanese returns to plummet over 2006, damaging pan-Asia portfolios despite strong growth across rest of region

Performance of Asia including Japan funds has dropped over the past year as Japanese exposure in 2006 dragged returns down. Despite a period of outperformance in 2005, Japan dipped in 2006 on the back of political and interest rate concerns. Over three years to the end of June, the average fund in the sector returned 74.61% bid to bid, with an average of 17.53% over 12 months according to Morningstar. As dictated by the IMA sector classification, each fund in this sector must have at least 80% in Asian equities including Japan. Keith Wade, chief economist at Schroders, said the Japanese...