The current investment performance is greatly affected by the weak yen… “Is it safe to choose NISA and Orkan?

The market capitalization of a stock is calculated as “share price x number of shares outstanding” and is generally considered to indicate the size of a company. Most stock indices are then constructed based on market capitalization. Therefore, the composition ratio of stock markets and stocks with large market capitalization rises, creating a bias that increases the risk of the fund.

It should be noted that the degree of diversification has been declining in recent years, although index funds are a low-cost and efficient investment method that can provide diversification benefits. Could it be said that this shows the limitations of index management?”

Active funds” of domestic stocks are also an option.

So, with these weaknesses in mind, what is the best way to invest?

If you have a surplus fund that you do not plan to use for at least the next 10 years, I think there is no problem investing only in [All Country] or [S&P 500]. However, in that case, the ironclad rule is to control risk by accumulating funds, diversifying investment timing, and continuing to invest over the long term.

He also suggests combining an “active fund” of domestic stocks for those who are already accumulating investments in the [Orcan] and [S&P500] and want to invest more efficiently with a little less risk. There are various types of active funds, but basically they are investment trusts that aim to outperform an index.

Compared to the U.S., the Japanese stock market is a market where active funds tend to “beat” the index.

In addition, the companies in which the funds invest take on the currency risk without the individual investor having to bear the direct currency risk.

When hearing about active funds, many people exclude them from their choices because their management cost, the investment management fee, is higher than that of index funds.

However, there are a number of funds that have outperformed indexes even when costs are taken into account. It would be a waste to throw away the possibility of obtaining such excess returns.”

We asked Mr. Shinoda to pick out active funds of domestic stocks that are suitable for combination. He says that the standard investment amount when combining these funds is about half of the amount of the Orcan and S&P 500. We hope you will find this information useful.