Investing in FTSE 100 Stocks from Japan

[RetireJapan]

'Global funds' are predominately US stocks based i.e. US dollar based. So, if the dollar crashes the 'global funds' will be hammered. It makes perfect sense for a UK citizen having part of his / her investments in the GBP. If someone is paid in yen they should also have a percentage of their investments in the Japanese yen. Being overweight on funds which are predominately dollar based investments is a currency risk if you are a non-American paid in yen.

The currency a fund is denominated in has no effect on what it is worth, as the underlying assets determine the value, and the ticker price will just change to match the exchange rate.

You could make an argument for how companies will be affected by currency fluctuations I guess, but most of the big US firms (and most of the UK FTSE100) are international companies that have earnings in many countries, so less effect.

[MisoSoup]

'Global funds' are predominately US stocks based i.e. US dollar based. So, if the dollar crashes the 'global funds' will be hammered. It makes perfect sense for a UK citizen having part of his / her investments in the GBP. If someone is paid in yen they should also have a percentage of their investments in the Japanese yen. Being overweight on funds which are predominately dollar based investments is a currency risk if you are a non-American paid in yen.

The currency a fund is denominated in has no effect on what it is worth, as the underlying assets determine the value, and the ticker price will just change to match the exchange rate.

You could make an argument for how companies will be affected by currency fluctuations I guess, but most of the big US firms (and most of the UK FTSE100) are international companies that have earnings in many countries, so less effect.

Hmmm...If you buy some UK shares through your SBI account., SBI will buy the shares at the prevailing exchange rate. If you sell the shares a year later and the pound has increased against the yen by 10% you will in effect be 10% better off in terms of the exchange rate.

[mule96]

I couldn't find any analysts with that viewpoint. Bloomberg's view below seems to be shared by everyone else.

"There is convincing technical evidence that the British pound is showing a lot of long-term strength – in fact, when a currency is gaining over the long-term against all the majors, it is likely to be the strongest major currency, and that is the case with the British pound today".

When I meant long term, I was speaking in terms of several years or even decades. And there the GBP lost in general against various currencies (of course there have been ups also). I think the long term above is more looking at the last 4-5 months.

Maybe the pound will be stronger again the next months, maybe not. Maybe it will fall even further in the long term, may be not. I just think its pointless in retirement investing, to use such arguments for a reason to buy something. There are so many wrong analysts. This is just anarticle I googled:

https://theconversation.com/brexit-uk-p ... ome-152646

I think its questionable, but it is another opinion. I also don't know if bloomberg is better or worse.

'Global funds' are predominately US stocks based i.e. US dollar based. So, if the dollar crashes the 'global funds' will be hammered. It makes perfect sense for a UK citizen having part of his / her investments in the GBP. If someone is paid in yen they should also have a percentage of their investments in the Japanese yen. Being overweight on funds which are predominately dollar based investments is a currency risk if you are a non-American paid in yen.

That is exactly what I meant. It can make sense to invest in a certain market. But for retirement investing, it is in my opinion (and many other here), irrelevant, if a certain market was good the last months, or if a currency gains some strength (or weakens) in the next time. The long term focus is important.

[MisoSoup]

When I meant long term, I was speaking in terms of several years or even decades. And there the GBP lost in general against various currencies (of course there have been ups also). I think the long term above is more looking at the last 4-5 months.

The GBP is at the strongest it has been against most major currencies including the dollar for three years not 4-5 months.

That is exactly what I meant. It can make sense to invest in a certain market. But for retirement investing, it is in my opinion (and many other here), irrelevant, if a certain market was good the last months, or if a currency gains some strength (or weakens) in the next time. The long term focus is important.

Everyone's appetite for risk and goals (short, medium and long) are different. Just because some random guys on this website say that everyone should put 100% of their money in the e-Maxis Advanced Economies index fund doesn't mean people can't deviate from that path.

[Established]

Everyone's appetite for risk and goals (short, medium and long) are different. Just because some random guys on this website say that everyone should put 100% of their money in the e-Maxis Advanced Economies index fund doesn't mean people can't deviate from that path.

Do you have any specific evidence or insider information that leads you to think that the UK economy will outperform in the short, medium or long term? If not, then you are simply making an outsized bet.

This also translates as a sector bet as the FTSE 100 is overweight financials and consumer staples.

Does this meet your risk tolerance? If so great!

The GBP is at the strongest it has been against most major currencies including the dollar for three years not 4-5 months.

For long term-investors currency risk isn`t a serious concern, however, if you are worried about it just buy some currency-hedged funds. Here are some ETFS for example for those that are interested in outsized bets in the S&P500 and the NASDAQ.

https://maxis.mukam.jp/etf_trade/

ＭＡＸＩＳナスダック１００上場投信（為替ヘッジあり）- Currency hedged
ＭＡＸＩＳ米国株式（Ｓ＆Ｐ５００）上場投信（為替ヘッジあり）- Currency hedged
ＭＡＸＩＳナスダック１００上場投信
ＭＡＸＩＳ米国株式（Ｓ＆Ｐ５００）上場投信

[MisoSoup]

Do you have any specific evidence or insider information that leads you to think that the UK economy will outperform in the short, medium or long term? If not, then you are simply making an outsized bet.

No. Like everyone else - I can't predict what will happen in the future in various markets. To use your terminology, everything can be seen as a 'bet'. There are plenty of people who would dismiss the people putting all their money in the e-Maxis advanced economy fund as gamblers. The Japanese market is still below the 1989 highs. Stock markets will continue to rise - until they don't.

[Established]

No. Like everyone else - I can't predict what will happen in the future in various markets. To use your terminology, everything can be seen as a 'bet'. There are plenty of people who would dismiss the people putting all their money in the e-Maxis advanced economy fund as gamblers. The Japanese market is still below the 1989 highs. Stock markets will continue to rise - until they don't.

That is why instead you should invest in the global economy with MSCI ACWI or FTSE All Caps via Emaxis All Country or Rakuten / Vanguard Global equities.

Precisely because you cannot know wich sector or economy will outperform or underperform.
...

As a side note people often invest n Emaxis Slim Advanced economy as they have outsized Japanese exposure through company DC plans or Nenkin.

[adamu]

Just to diverge even further from the topic of the thread, another thing I've been thinking about recently in addition to relying on global market capitalization is that more and more companies are being kept private, meaning they don't show up in the index funds. There is a good article in Monevator's weekend reading this weekend about this trend.

Kanto provided the only useful reply to the OP's actual question. SBI and other Japanese brokers don't provide access to the London Stock Exchange besides via Japanese or US-based funds. Personally I didn't investigate those options because I decided I don't know better than the market so stick to global index funds. I imagine it's similarly hard to buy Japanese stocks directly from the UK.

[mule96]

The GBP is at the strongest it has been against most major currencies including the dollar for three years not 4-5 months.

1 GBP to USD, 2018/03/14: 1.397
1 GBP to USD, 2021/03/14: 1.3922
The GBP/USD was on the lowest a year ago (1.165), in the fact it is the lowest since 1985. And since then it gained strength.

1 EUR to GBP, 2018/03/14: 0.88574
1 EUR to GBP, 2021/03/14: 0.85928
A similar picture here. There was also a high in Aug 2019 (0.94), the highest since the financial crisis in 2008.

Everyone's appetite for risk and goals (short, medium and long) are different. Just because some random guys on this website say that everyone should put 100% of their money in the e-Maxis Advanced Economies index fund doesn't mean people can't deviate from that path.

Once again, I agree, as I said it can be reasonable to invest into a certain market. But what I don' agree is that short or even midterm investing is something that goes with retirement planing (which this website is).

No. Like everyone else - I can't predict what will happen in the future in various markets.

Then why do you argue that the GBP or the english stock market will develop positively in the future? I don't even disagree with you (but for the sake of balance and a discussion I usually try to take an opposite point of view ).

[MisoSoup]

Once again, I agree, as I said it can be reasonable to invest into a certain market. But what I don' agree is that short or even midterm investing is something that goes with retirement planing (which this website is).

Whilst the point of this website is long-term retirement planning, a part of that involves shorter term goals. i.e. adjusting the balance of your investments as you get older. Most people would agree that someone in their 20's should take more risks than someone nearing retirement for example.

As a side note: Some of the most active discussions on this website feature BItCoin and Gamestop. My definition of 'short-term' is at least a few years rather than a few hours of Gamestop movements.

Then why do you argue that the GBP or the english stock market will develop positively in the future? I don't even disagree with you (but for the sake of balance and a discussion I usually try to take an opposite point of view ).

It's not unreasonable to be 'overweight' in your 'home market'. I don't mind going with a gut feeling. If I'm wrong so be it.