Despite a rocky start to the quarter with news of reciprocal tariffs triggering a market sell-off, the overall performance in the Japanese equity market was robust in the second quarter. The TOPIX index rose over 5.8% in AUD terms. However, this growth was quite narrow, driven primarily by three sectors: communication services, technology, and industrials, with artificial intelligence (AI) and defense themes leading the charge.
The Lazard Japanese Strategic Equity Fund underperformed the benchmark, returning 3.1% (net of fees). The underperformance all came in early April, with banks, a sector where we are overweight, underperformed sharply during this risk-off period.
In this video update, Portfolio Manager/Analyst, June-Yon Kim discusses the quarter and his outlook for Japanese Equities.
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