We own funds to cover parts of the investment universe where we cannot use individual shares, be it to buy Mexican real estate or Japanese small caps, explains international investing expert Vivian Lewis, editor of Global Investing.
Fibra Uno Administration SA (FBASF) is becoming more than a landlord owning Mexican malls and shopping centers. It is becoming a partner with tenant chains in internet services, now offered across the country.
Its new model later was applied to banking and ATM presence via a deal with BBVA Bancomer, Mexico's leading bank. It also signed up a gourmet food store group, The Happy People & Development Company (a Mexican group despite the name) in the capital.
Now Eduardo Garcia writes that it is also adding restaurants to its malls nationally. Sonora Grill House, despite another English-sounding name, is a Mexican steakhouse brand. A new deal will place its restaurants in principal FBASF shopping areas around the country.
As much as 3,400 sq. meters of space in Uno's commercial centers like Hilton, Midtown Jalisco, Isla II of Cancun, Mitika, Alameda, and Portal Norte will have Sonora steak restaurants added—all of them purely Mexican according to Andre El-Mann, who heads the REIT.
Fitch affirmed FBASF's BBB credit rating which is better than that of many of its customers. Despite this move, FBASF shares fell 3.65% today in OTC trading.
Japan Smaller Cap Fund (JOF) reported a 9.6% drop in NAV in the half to August 31 and its discount from Net Asset Value per share rose to 14.1% of NAV of $12.67. The fund lost 5.9% from dollar gains in the half and also underperformed its Topix cap-weighted banchmark.
In its August quarter the benchmark fell 4.6% in yen and 2.7% in dollars, but the fund lost 8.1%. The mean reason was sector allocation which underweighted information and telco and overweighted metal products.
This is a tough market for savvy investors like the fund managers who also expand US expansionary policies to boost the risks of inflation, along with tariffs on China. Japanese companies are goosting profits in manufacturing and in the current fiscal year (ending Mar. 2019).
Japanese small cap profit growth is expected to top 10.4% and the average p/e ratio to be about 16. The biggest risk is the Yen whose exchange rate dominates the valuation of the mostly domestic smaller cap non-ADR share markets.
The top ten companies in the JOF portfolio are unknowns, and its top sectors are retail trade; wholesale trade, chemicals, machinery, construction, and iron & steel. JOF's yield is 5.33%.
