The depreciation of the Yen has been one of its fastest moves in 50 years, says Pendal’s Nudgem Richyal.
“The data on my Bloomberg terminal only goes back to 1971. At one point it was falling most every day.”
Many investors expect this to continue as money flows out of the Yen into US bonds for example.
What does that mean for global equities investors?
“At this stage we wouldn’t be keen to step in and say, well, actually this [Yen depreciation] has gone too far, we need to get involved on the other side,” says Nudgem, who co-manages Pendal Global Select Fund.
“From a portfolio perspective our views are much more medium-to-long-term and it wouldn’t make too much difference.
“We have a couple of Japanese exporters and we’re not suddenly going to sell them because we think ‘well, this yen move means that so much more can be priced in.
“Trends go on longer than most people expect. I’m not going to call a top, because it’s too dangerous to stand in front of a steam roller.”
Nudgem does advise investors to keee an eye on US 10-year bonds.
“The one macro variable that may put pause to this is if the 10-year [yield] in the US stops going up. It could be that inflation’s peaked. It could be the Fed has broken something. That may put a pause to this move.
“We take currency seriously in our beta view of the market and we think you cannot afford to be oblivious to it.
“Currency is one of the mechanisms that will help or hurt you. This is a great example right now.”
Pendal Global Select Fund
Something very different in global equities
Nudgem Richyal co-manages Pendal Global Select Fund with Chris Lees. The pair have been working together in global equities investing for more than 20 years.
Nudgem has 22 years of industry experience, joining J O Hambro Capital Management (a wholly owned subsidiary of Pendal Group) with Chris in 2008. He was previously an investment director with the Global Equity Group of Baring Asset Management, where he worked closely with Chris since 2001.
Pendal Global Select Fund is a global equities portfolio with a distinctive, yet proven approach and a 17-year track record of outperformance. Since its inception, the underlying strategy (JOHCM Global Select Fund) has delivered top-decile performance in Lipper and 2nd decile in Morningstar.*
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management. Pendal Group includes Pendal Australia, J O Hambro Capital Management, Regnan and Thompson, Siegel and Walmsley (TSW).
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