Foundation & Endowment Money Management - Managers See Play On Japan

Managers See Play On Japan

David Baran

Andy Iseri

Benjamin Segal

Tom Heck After many years of recession, the Japanese market has begun showing signs of life. Recently the country experienced an historic election, which may have created new investment opportunities. FEMM Contributing Reporter Joseph D'Allegro spoke with David Baran, founder and co-ceo of Symphony Financial Partners; Andy Iseri, an investment consultant at Callan Associates; Tom Heck, cio of Ball State University Foundation; and Benjamin Segal, managing director and portfolio manager for the global equity team at Neuberger Berman, about the moves nonprofits should be making in the region.

FEMM: Why should a nonprofit invest in Japan?

Baran: Valuation levels are particularly attractive for the small- to mid-cap companies that account for the bulk of listed companies in Japan. Despite China's rise in economic activity in the past decade, the financial markets and legal/regulatory environment in China are still relatively immature in comparison to Japan. Japan has played a primary role in the growth and development of the Chinese and other Asian economies, and will continue to play this role. In this respect, investment into Japan offers exposure to future growth in Asia via the largest financial markets and most developed legal/regulatory environment in the region.

Heck: Japan-specific investments have been off the radar screen for many investors for awhile. Positive changes in the economic environment may reward wise, early, long-term investors in these changing opportunities.

Segal: Japan is the world's second largest economy and is home to the world's third largest stock market. Japan is also home to some of the world's most successful companies which offer the possibility of good returns as well as diversification. However, corporate governance in Japan is weak in our view, and both growth and returns tend to underperform those in other markets. Investors need to be careful.

FEMM: How might the recent election of the Democratic Party of Japan affect the market and investments there?

Baran: The election of the DPJ, ending ...

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Managers See Play On Japan

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