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“In the past I tended to to own a lot more international companies than domestic ones—obviously the domestic industry in terms of growth was lagging globally as well,” said Inoue, whose fund has beaten 89% of its peers in the past year. “But what has really changed was I get a lot of good stories out of domestic companies, especially financial institutions. So I have a really punchy bet on financials.
Financial firms also have lower valuations than the overall market, with the price-to-book ratio for the Topix banks index trading at 0.82 time while the Topix index’s ratio is trading at 1.46 times.