The Voya Japan TOPIX Index Portfolio Class A (IJIAX) fell by 6.7% in September 2015 from the previous month. In the three- and six-month periods ending September 30, the fund fell by 10.6% and 7.3%, respectively. However, in the YTD (year-to-date) period, the fund was up by 3.0%.
For the three- and six-month periods, the fund’s performance placed it in the bottom half of the group of funds we’re analyzing in this series, whereas for the six-month and year-to-date periods, the fund’s performance was just above average. Let’s look at what contributed to this performance.
Portfolio composition and contributions to returns
IJIAX is a comparatively new offering, second only to BIAJX, having been in inception since August 2009. Since it is a passively managed fund, all portfolio descriptions that we mention here will refer to only the index and not to active picks—unlike the other Japan-focused mutual funds we’ll be examining in the series.
The following is a quick breakdown of the fund’s holdings:
- Consumer discretionary and industrials were the two largest sectors, comprising 21.2% and 20.1%, respectively, of IJIAX’s portfolio.
- Financials came in at a close third place, making up 18.2% of the fund’s portfolio.
- All other sectors have lower than 10% of the weight of the total portfolio.
Now let’s look at the individual contributions from these sectors in September 2015:
- The industrials sector was the biggest negative contributor to the fund’s returns in September. Among nearly 400 stocks making up the industrials sector, Mitsubishi Corporation (MSBHY) emerged as the biggest negative contributor to returns.
- The financials sector followed industrials in terms of negative contributions to the fund’s September returns. The sector, comprising over 150 stocks, was led down by Mitsubishi UFJ Financial Group (MTU). Mizuho Financial Group (MFG) and Sumitomo Mitsui Financial Group (SMFG) were also large negative contributors.
- Telecom services, the third-biggest negative contributor to returns, had exposure in only four stocks in the fund, barely making up 5.0% of the portfolio. Still, the sector outdid several other sectors with a larger exposures in terms of negative contributions to returns. SoftBank Group Corporation (SFTBY) was the biggest decliner among the sector holdings, followed by KDDI Corporation.
- The IT (information technology) sector and the healthcare sector, with a combined 200 stocks in exposure in the fund, were also substantial negative contributors to the IJIAX’s returns in September. While Nintendo (NTDOY) led down the IT sector, Astellas Pharma (ALPMY) was the biggest negative contributor to the health care sector.
Because it is passively managed, we can’t evaluate the sectoral allocation and stocks picks for this fund. We can say, though, that if you want an exposure to Japanese equities but are not game for active management, a passively managed strategy could be ideal for you.
Continue to the next part of this series for a look at the Matthews Japan Fund Investor Class (MJFOX).