Neptune takes bearish stance on Japan

Neptune's Chris Taylor has hedged his Japan Opportunities fund from yen back to sterling as a result of the group's bearish expectations for the country's currency and equity market.

The fund is now all in sterling and this protects it against a decline from both the yen and Japanese market.

Neptune says given its outlook it is not promoting or marketing the £28m Japan Opportunities fund in any way. Instead the team believes current market opportunities lie in sectors such as US equities, UK equity income and the emerging markets, says Taylor.

Despite dire market conditions, Taylor's Japan Opportunities fund managed to deliver 82% during 2008.

This was achieved by maintaining a 20% cash position and hedging the fund's total equity holding by selling Topix futures contracts against it.

Neptune's pessimistic outlook for Japan comes as other managers believe the country's stock markets are finally bottoming.

David Mitchinson, manager of the JPM Japan fund, has said Japan is in a bottoming process with the valuation cycle at its lowest for around 20 or 30 years.

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