Yen keeps going from strength to strength!

User avatar
ChapInTokyo
Veteran
Posts: 240
Joined: Sat Jul 02, 2022 12:56 am

Yen keeps going from strength to strength!

Post by ChapInTokyo »

When the yen was around 160 yen to the dollar, I wouldn't have thought we'd be at 141.31 yen to the dollar so quickly... definitely something to be said for currency hedging your global bond exposure...

Image
Tsumitate Wrestler
Veteran
Posts: 633
Joined: Wed Oct 04, 2023 1:06 pm

Re: Yen keeps going from strength to strength!

Post by Tsumitate Wrestler »

The approach for most Japanese Bogleheads (ala Random Walker: https://randomwalker.blog.fc2.com/) is Global Equities+ JGBs/Cash for this reason.

50/50, hedged and non-hedged seems reasonable.

I wonder how long bonds shares purchased at 160 will be underwater?
User avatar
ChapInTokyo
Veteran
Posts: 240
Joined: Sat Jul 02, 2022 12:56 am

Re: Yen keeps going from strength to strength!

Post by ChapInTokyo »

In my iDeCo I am 50:50 in to eMaxis Slim All Country + Tawara Developed Markets Bond Fund Currency Hedged and the bonds are still above water unlike the stocks fund which is unhedged (I also have inflation hedged JGB fund too btw).

Image
Tsumitate Wrestler
Veteran
Posts: 633
Joined: Wed Oct 04, 2023 1:06 pm

Re: Yen keeps going from strength to strength!

Post by Tsumitate Wrestler »

ChapInTokyo wrote: Wed Sep 11, 2024 12:04 pm In my iDeCo I am 50:50 in to eMaxis Slim All Country + Tawara Developed Markets Bond Fund Currency Hedged and the bonds are still above water unlike the stocks fund which is unhedged (I also have inflation hedged JGB fund too btw).

Image
Which is exactly what you would expect from a hedged fund when the yen is strengthening.

The knock-on effect from currency appreciation and depreciation really makes fixed-income an undesirable vehicle for those investing in yen terms in my opinion.

All those Japanese portfolio simulators keep trying to convince me 100% global equities is risky, and I need to diversify into .....domestic stocks and REITs?
User avatar
ChapInTokyo
Veteran
Posts: 240
Joined: Sat Jul 02, 2022 12:56 am

Re: Yen keeps going from strength to strength!

Post by ChapInTokyo »

Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?

Image
User avatar
RetireJapan
Site Admin
Posts: 4728
Joined: Wed Aug 02, 2017 6:57 am
Location: Sendai
Contact:

Re: Yen keeps going from strength to strength!

Post by RetireJapan »

ChapInTokyo wrote: Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?
Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas ;)
English teacher and writer. RetireJapan founder. Avid reader.

eMaxis Slim Shady 8-)
Tsumitate Wrestler
Veteran
Posts: 633
Joined: Wed Oct 04, 2023 1:06 pm

Re: Yen keeps going from strength to strength!

Post by Tsumitate Wrestler »

RetireJapan wrote: Thu Sep 12, 2024 12:06 am
ChapInTokyo wrote: Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?
Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas ;)
Indeed, Emaxis Slim All Country represents EM and Japanese equities at the market rate. The REIT exposure is up for debate though.

Also, I do not think anyone is looking at 1 month periods with these kinds of investments. The recommended minimum target period for a global equity approach is a decade at least.
TokyoWart
Veteran
Posts: 824
Joined: Tue Oct 02, 2018 8:39 am
Location: Tokyo

Re: Yen keeps going from strength to strength!

Post by TokyoWart »

If you think about the yen-dollar exchange rate over the last 35 years or in relation to purchasing power parity, the yen is till incredibly weak.
User avatar
ChapInTokyo
Veteran
Posts: 240
Joined: Sat Jul 02, 2022 12:56 am

Re: Yen keeps going from strength to strength!

Post by ChapInTokyo »

RetireJapan wrote: Thu Sep 12, 2024 12:06 am
ChapInTokyo wrote: Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?
Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas ;)
If a particular asset class moves up when the world index goes down and vice versa, that reduces the portfolio volatility. It is a different objective from keeping to the straight and narrow of market cap weighting, but there will be diversification benefits from adding lower correlation asset classes.
User avatar
ChapInTokyo
Veteran
Posts: 240
Joined: Sat Jul 02, 2022 12:56 am

Re: Yen keeps going from strength to strength!

Post by ChapInTokyo »

Tsumitate Wrestler wrote: Thu Sep 12, 2024 12:12 am
RetireJapan wrote: Thu Sep 12, 2024 12:06 am
ChapInTokyo wrote: Wed Sep 11, 2024 11:49 pm Me, I'm a fan of Monex Vision. At first, I was a bit dubious about it's suggestion of adding more Japanese equity, or REITS or Emerging Market equity to reduce volatility, or to increase potential gains, but you know what they say about diversification being the only free lunch around?
Adding extra Japanese equity or emerging markets to a world index is not increasing diversification, it is adding concentration to those areas ;)
Indeed, Emaxis Slim All Country represents EM and Japanese equities at the market rate. The REIT exposure is up for debate though.

Also, I do not think anyone is looking at 1 month periods with these kinds of investments. The recommended minimum target period for a global equity approach is a decade at least.
Personally I am over weighting Japanese equities as well as world small cap value companies in my portfolio. These will not move in lock step with the companies included in the AWCI index.

As for the 1 month period of the google finance chart, I could not get a 10 year chart because of the inception date of the ETFs, but here is a 5 year chart. I think that you can see that correlation is not high among these asset classes.

Image
Post Reply