U.S. markets were closed Monday, and while many Americans enjoyed a day off, Japanese equities extended recent bullishness, with the Nikkei 225 touching 30,000.
Advisors can allocate to that trend with WisdomTree’s Developed International Model Portfolio.
“This model portfolio is designed for investors with a long-term horizon looking for exposure to a broad universe of Developed International equities primarily using factor focused ETFs. The selected ETFs provide certain factor tilts that have the potential to generate excess return relative to comparable cap-weighted benchmarks over longer-term holding periods. The strategies may use both WisdomTree and non-WisdomTree ETFs,” according to WisdomTree.
Several of the ETFs in the model portfolio are diversified developed international funds with strong exposure to Japanese stocks.
“Many domestic investors are impressed by the Nikkei hitting 30,000. Indeed, the ‘equity culture’ is solidifying here. For ages in Japan, equities were considered too risky and a dishonorable way to invest, but now such are much more respectable,” said John Vail, chief global strategist at Nikko Asset Management. “Memories of the 1980s bubble and the high valuations that persisted through much of the 1990s are fading, with the realization that the past decade represents the true character of the stock market, driven by reasonable valuations, improved profits and shareholder returns via surges in dividends and buybacks.”
Japanese Economic Strength
Japan has been able to handle the effects of Covid-19 well, especially given its proximity to China. Per an FX Street article, the country has been able to rebound better than the United States.
“There are always doubters who perennially point to demographics, but such has not prevented tremendous growth in corporate earnings, including such from Japan’s extensive global manufacturing bases. Productivity gains and greatly improved corporate governance have also easily offset the negative macro factors commonly mentioned,” said Vail.
Economic data indicate the WisdomTree model portfolio is one for advisors to consider over the near-term.
“GDP has much room to improve, especially as personal consumption remains 4% below pre-COVID levels and demand for Japanese exports, particularly in hi-tech, remains strong. The shift to alternative energy is also a major impetus for new corporate investments in the quarters and years ahead, as Japan should continue to be a leader in such technologies,” concludes Vail.
For more on how to implement model portfolios, visit our Model Portfolio Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
