Principal Asset Management is encouraging investors to increase exposure to Japanese equities, citing structural reforms, stronger corporate governance, and the end of Japan’s long deflationary period as key growth drivers.
According to CEO Jumpon Saimala, Japanese companies are benefiting from improved profitability, rising shareholder returns, stronger earnings growth, and record share buybacks. He also noted that Japanese stocks remain attractively valued compared with US equities, despite recent market gains.
Another major factor is the government’s “Sanaenomics” strategy, which aims to boost growth through investments in sectors such as semiconductors, artificial intelligence, and automation, while encouraging households to invest more through the tax-friendly NISA savings scheme.
Principal recommends the Principal Japanese Equity Fund (PRINCIPAL JEQ), which invests mainly in high-quality Japanese value stocks across sectors including healthcare, pharmaceuticals, and industrial manufacturing. The fund’s master portfolio delivered annualised returns of 29.8% over one year, 25.1% over three years, and 16.5% over five years as of March 31.