Stock Selection Saves the Nuveen Tradewinds Japan Fund – A

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Nov. 20 2020, Updated 12:11 p.m. ET

Performance evaluation

The Nuveen Tradewinds Japan Fund – A (NTJAX) fell 4.4% in August 2015 from a month ago. In the three-month period ended August 31, the fund fell 2.1%, the third least faller among the funds in this review. In the six-month and year-to-date period to August 31, the fund posted returns of 4.2% and 15.5%, both being the second best among its peers in this review.

Let’s look at what has contributed to the fund’s performance and why it posted negative returns in August.

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Portfolio composition and contribution to returns

The August 2015 composition of NTJAX favored the industrials sector. This was followed by the consumer discretionary and consumer staples sectors, which made up 15.9% and 14.6%, respectively, of its total assets. Financials were also close, making up 14.1% of August’s portfolio.

While all sectors the fund is invested in contributed negatively to overall returns, it was the consumer staples sector that led the pack. Shiseido (SSDOY) was the biggest negative contributor to returns among consumer staples stocks.

Consumer staples was followed by financials, which was led down by Sumitomo Mitsui Trust Holdings, the second biggest sectoral holding. The industrials sector followed financials among the biggest negative contributors to return, with Mabuchi Motor pulling the performance of the sector down.

The telecom services sector fell the least among all sectors, with both holdings—NTT DoCoMo (DCM) and Nippon Telegraph & Telephone (NTT)—contributing negatively only marginally to overall returns.

While FUJIFILM Holdings (FUJIY) and LIXIL Group (JSGRY) continued positively to overall returns, Kyocera (KYO) and Astellas Pharma (ALPMY) contributed negatively.

Stock selection saves further underperformance

The Nuveen Tradewinds Japan Fund – A (NTJAX) has done quite well in 2015 so far. The primary reason the fund posted negative returns in August is that all its sectors contributed negatively to returns. However, in all sectors, the top negative contributors didn’t have the highest weight in the sector.

In some cases, its top stock holding in each sector contributed less negatively than another smaller holding. In other cases, its top stock holding contributed positively to returns. This helped the fund avoid further underperformance in August.

In the next article, we’ll look at the T. Rowe Price Japan Fund (PRJPX).

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