Doing a Buffet

[northSaver]

I still have 40 man (400k) yen to invest in my SBI regular NISA before the end of the year, and I'd like to invest in the following five Japanese trading firms, rather than the usual index funds:

Itochu Corp (8001)
Mitsubishi Corp (8058)
Mitsui Corp (8031)
Marubeni Corp (8002)
Sumitomo Corp (8053)

This is not my original idea of course. It is what Warren Buffet has been doing since 2020 and is continuing to do now. And what's good enough for Buffet is good enough for me!

The problem is that if I buy just the stocks then the juicy dividends that these firms pay out will not be reinvested and so will not compound over the long term. In fact I'm not sure I'm even able to buy stocks in these companies with such a paltry amount?

So what I need is a mutual fund that holds these five stocks heavily. 20% each would be ideal but I doubt there is a fund like that. So my questions are:

Is there an easy way to find out if such a mutual fund exists?
Or better still, does anyone know of such a fund?
Or is it simply a case of trawling through all the domestic stock funds on offer and seeing what their stock allocations are?

Thanks

[zeroshiki]

Well for one thing only Marubeni and Sumitomo won't blow through your NISA limit so just buying the stocks is automatically out.

This is probably the fund you're looking for: https://www.sbisec.co.jp/ETGate/WPLETsi ... e_code=JPN

It follows the TOPIX-17 Index and has your list of trading companies and more. Seems like it has distributions though.

Prospectus here: https://www.nomura-am.co.jp/fund/pros_gen/Y1141629.pdf

[northSaver]

Thanks for the useful information zeroshiki. That ETF is pretty much what I'm looking for in terms of stock allocations and expense fees, but as you said it distrubutes dividends (every July) rather than accumulates them. If only there were a mutual fund based on the same narrow slice of the TOPIX

I may go for it anyway, but if anyone has any better ideas please let me know.

[TokyoBoglehead]

Thanks for the useful information zeroshiki. That ETF is pretty much what I'm looking for in terms of stock allocations and expense fees, but as you said it distrubutes dividends (every July) rather than accumulates them. If only there were a mutual fund based on the same narrow slice of the TOPIX

I may go for it anyway, but if anyone has any better ideas please let me know.

Can you explain why you're interested in dividend stocks then?

The main attraction of dividends stocks is the income they generate, when you remove that you remove their main advantage.

Buffet had very different reasons to allocate in this manner, it cannot be applied 1 to 1 for a retail investor. He is very clear that he recommends investor use passive and not mirror his investments.

He would almost assuredly tell you to invest in all in a s&p500 fund...

[northSaver]

I'm not so interested in them for their dividend yield, I'm interested in them for their growth potential. These five stocks have already risen between 97% and 248% since Buffet bought them in August 2020, and the fact he's recently bought some more suggests that he believes they still have room to grow.

It's actually a bet on rising commodity prices when you boil it down, since most of these companies are heavy on oil, coal, iron, copper and nickel. When the world gets past its looming recession, and China gets out of lockdown, we'll probably see a lot more demand for commodities. Yes, there are commodity ETFs (I already own one) which may be more suitable, and of course I already have decent exposure to US, Japanese and global stock markets. This is just a little money left over that I'm prepared to take a small gamble on.

[captainspoke]

We know someone who just got a job at a north american branch of itochu (tech solutions).

[northSaver]

We know someone who just got a job at a north american branch of itochu (tech solutions).

They seem like a good place to work. In Japan they're usually at the top of the list in the "Where would you like to work after you graduate?" surveys for 4th year university students. Nintendo is usually not far behind. Funnily enough my son will become a game developer at Nintendo next year after he graduates. It's a dream job for him

[northSaver]

So, ETF 1629 (recommended by zeroshiki above) is trading at 52090 yen right now, which is about 1.5% off the all time high last week. If I buy now then I can only buy 7 units, and have change left over. It's much better to buy 8 units at 50000 yen if I can. So - silly question maybe - can I place a limit order to buy at 50000 in SBI NISA? Or are only market orders allowed? Sorry but I'm not familiar with NISA much.

[zeroshiki]

NISA is just an account type. You can do the same thing you can do with normal/tokutei accounts with it. The market order expires in a day though so you'd have to set it to a week or something but looking at its trading volume, you might have to wait a while.

[northSaver]

Yeah, the trading volume is thin. That's another reason to set a limit order if I can. Thanks.