Better governance practices by Japanese companies appear to be linked to stronger fundamental metrics, a possible contributor to the recent rally in Japanese equities.  

Regulatory reform has been one of the forces boosting the Japanese equity market’s performance over the last two years — but capital efficiency and margins still disappoint. Improving these metrics may be key to further improvement in the market.  

Over the last several years, most active growth managers underweighted the “Magnificent Seven.” Nearly two-thirds of growth managers, however, partially or more than offset the resulting performance drag with active bets on other stocks.

In 2022, unlike in the prior two years, stock selection took a backseat to style factors and industry bets as performance drivers. Top-performing funds gained from all three exposures, while bottom-performing funds lost on all counts.

Haruhiko Kuroda is stepping down after a decade as governor of the Bank of Japan, and the soon-to-be-appointed Kazuo Ueda has the potential to shake things up. What could the new regime mean for investors?

As the world mourns former Japanese Prime Minister Shinzo Abe, we ask: What was his impact on Japanese firms and global investors? To help answer, we look at two key initiatives: competitiveness and profitability, and corporate governance.

Given the recent spike in energy prices we ask: How have higher energy prices affected the performance of climate indexes, which normally have less exposure to traditional energy companies?

Selecting an equity benchmark may mean balancing market coverage and investability. For example, exhaustive coverage may include microcap stocks, with lower liquidity and investment capacity. But excluding them may reduce low-size-premium exposure.

ESG ratings have reflected financial risk and returns in developed-market and emerging-market equities. But was this true in China, where ESG considerations are still in their infancy?

Planned reforms in the stock exchange of Japan sparked a debate on investability and market representativeness of the country’s domestic benchmark index. We investigated three approaches to market-cap-weighted equity indexes.

Some observers are concerned that when the Bank of Japan (BOJ) eventually ends its ultra-easy monetary policy, it could hurt the Japanese stock market. Part of this concern stems from the fact that the BOJ’s unconventional monetary policy involves purchasing Japanese exchange-traded funds (ETFs).

The Japanese equity market’s spectacular crash in the early 1990s is referred to as the “lost decade.” Recently, this period has been extended to include the decade that followed. Despite this, most Japanese investors continue to favor an outsized domestic equity allocation. This home bias has come with a huge opportunity cost. Since the end of 1987, the cumulative return of global stocks was over 1,400% in yen terms, while the cumulative return of Japanese stocks was only 49%.