Artificial intelligence looks to the Far East as the best investment opportunity of the moment. The following ETF pointing to stocks outside the US is accumulating Japanese equities and now make up over a third of its portfolio. L’AI Powered International Equity exchange-traded fund increased its exposure to Japan to 36% this week from just 9% earlier this year, according to Bloomberg data.
Japanese equities have been cornered in recent months since change of government, the global increase in yields and the collapse of the yen. The Topix index had risen as much as 8% since late August amid investor optimism about potential stimulus, before losing all those gains in the ensuing period as investors rejected new Prime Minister Fumio Kishida’s plans to a “new type of Japanese capitalism“.
And today, the country’s stocks are seen cheap relative to their international peers, with export-heavy companies offering good exposure to global reflation trade.
Australia is the second most popular bet for AIIQ, third place for Israel, while the bottom is heavily underweight European equities, despite their solid performance over the past year. At the sector level, the fund favors i technology, health and financial stocks.
Since the beginning of the year, the AI Powered International Equity ETF has recorded approximately + 7%. In the first 9 months of 2021, with + 8.5%, it essentially matched the former US equity benchmark (FTSE Developed ex US All Cap Net Tax Index). Since its launch in 2018 it has risen + 43%, with a marked outperformance compared to + 25% of the benchmark.