Bye Bye to the Best Japan Fund

Posted by: Lauren Young on February 23, 2006

New investors can say “Sayanora” to one of the best Japan funds out there. Fidelity Investments is closing Fidelity Japan Smaller Companies (FJSCX) to new accounts as of the close of business on Feb. 28, 2006.

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“This fund has turned in three straight years of robust investment returns, which has led to strengthening cash inflows and a growing asset base,” said Eric M. Wetlaufer, chief investment officer overseeing international investments. “For example, Japan Smaller Company’s assets stood at more than $2.3 billion at the end of January, up from $1.3 billion at the end of 2004, which is a significant increase given the fund’s investment focus on smaller companies. That recent growth, combined with the potential we see for strong inflows in the months ahead, led us to decide that it’s in the best interests of the fund’s shareholders to close it to new investors. We believe that limiting new purchases of the fund will help stabilize cash flows and will benefit (fund manager Kenichi Mizushita) in his management of this fund at this time.”

This is one of Fidelity’s hottest funds, gaining an annualized 42% during the past three years through Jan. 31. It’s also the sole Japan fund with an A-rating from BusinessWeek’s Mutual Fund Scoreboard.

Given the recent run up in the Japanese stock market, I don’t think it’s a great time to pour money in to Japan. That said, it seems like this recovery is real—unlike so many false starts in the past. So, if you are thinking about investing in Japan, a mutual fund is definitely the best way to go—and you can do it slowly by dollar-cost averaging. Some good Japan funds to choose from are Matthews Japan (MJFOX), The Japan S (SJPNX), and Fidelity Japan (FJPNX).

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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