In uncertain times, it’s important not put all of your eggs in one basket. That is the view of Unigestion’s Alexei Jourovski, who runs several funds at the firm including the UNI-GLOBAL - Equities World fund.
The Citywire A-rated Jourovski said turbulence in Europe and the US has made companies in Japan an even more attractive investment.
‘We think the Japanese market is quite interesting for diversification, especially because of political situations the rest of the world has faced,' he told Citywire Selector.
‘We have both cyclical and non-cyclical stocks in Japan, we hold airlines as they will profit if the yen weakens, and we have non-cyclical stocks such as MH foods and Oriental Land which operates the Disney Park close to Tokyo.’
Jourovski currently has 13% of the fund allocated to Japan and holds airline operator ANA Holdings in the top five holdings of the portfolio with a 1.65% position.
‘Over the past few weeks ANA has done very well, Japan, in general, is attractive to us and in the last few weeks we have added about 0.5% to our Japanese holdings.’
‘We are mainly interested in markets that provide valuation support, in the Canadian market where we hold 4% of the fund we are invested in companies like DCE, which is a telecoms company. We believe countries like Canada can provide valuation support and benefit from weak currencies.’
As of 31 October, Jourovski had a 1.56% allocation to multinational conglomerate company Berkshire Hathaway, however, recent decisions by the firm's CEO Warren Buffet to place fresh bets on three big US airlines has caused Jourovski to reconsider his allocation.
‘Recently we have been scaling back the holding and we have significantly reduced our position. We like exposure to Japanese airlines, but in the US it’s a lot different because of the political risk factors, the airline industry in the US is still an industry which may need more consolidation.’
‘As a risk measure we have divided the position by half and we are considering selling this completely.’
Jourovski said Buffet’s decision to use more creative accounting methods indicates possible problems for the company.
‘We are not comfortable with the changes in accounting, for the future of the company we believe the changes made in accounting are not a safe thing to do.’
‘The share price reaction to the stock and its performance has been fantastic and we have had no problems there, the decision to scale back on the position was a relatively easy decision on our end.’
The UNI-GLOBAL Equities World fund returned 16.37% in USD terms over three years to the end of October 2016. This compares with a 12.30% rise by its Citywire-assigned benchmark the FTSE World TR USD, over the same time period.