The single worst-hit fund in the global downturn is JPM Turkey Equity, which has lost 22.28 per cent in sterling terms, but the next 16 biggest losers are all Japanese funds.
However, FE Alpha Managers David Ballance and Steve Russell of the Ruffer Investment Company, who called the surge in Japan before it happened, say they are convinced that investors should remain in the country for the longer-term.
"All our analysis in this area, (and our chief executive and head of research have been out in Japan again in the last month), leads us to conclude that this is an equity market with which we should remain substantially involved," they said.
Russell and Ballance say that in May they took some profits from banking and property stocks that had more than doubled since November, but they retain 19 per cent of the fund in Japanese equities overall.
"We note with encouragement that Japanese household spending has enjoyed the biggest increase in nine years, with Tiffanys sales in Japan, a very reasonable proxy for luxury spending, up 21 per cent in the last 12 months."
The average fund in the IMA Japan sector has lost 14.46 per cent since markets peaked, according to data from FE Analytics, almost double the 7.66 per cent lost by the IMA Global Emerging Markets sector.
IMA Japanese Smaller Companies funds have done even worse, losing 15.6 per cent, making it the worst-hit sector in the IMA universe.
Funds that invest entirely in gilts have protected investors the most, losing just 0.75 per cent, while the newly renamed IMA Targeted Absolute Return sector has done the next best job, losing just 1.04 per cent.
Performance of sectors since 22 May 2013
Source: FE Analytics
The Japanese market has now made up all gains since the appointment of Haruhiko Kuroda as the new Bank of Japan governor and the announcement of his monetary stimulus.
However, the market is still up 16.18 per cent in the year-to-date, according to data from FE Analytics.
Neptune Japan Opportunities is the IMA Japan fund most hit by the sell-off, having lost 19.65 per cent over the period; it is the second-worst performer in the entire IMA universe since 22 May.
Legg Mason Japan Equity has lost 16.85 per cent and GLG Japan Core Alpha 16.44 per cent.
The Legg Mason Japan Equity fund is still up 48.01 per cent over the year, however, in which period it is the leading fund in the sector.
The Ruffer Japanese fund, which makes up 3.4 per cent of the Ruffer Investment Company, has lost 11.71 per cent over that time.
James Maltin, investment director at Rathbones, is less sure about the prospects for the country.
He says the reception of the government’s proposed structural economic reforms is essential to whether the market goes up or down.
"[Last week’s] announcement of the structural reforms that the government will seek to make (the ‘third arrow’ of Abenomics alongside radical monetary and fiscal policies) was not well received – the package is considered to be lacking in detail," he said.
"For example, although Mr Abe targets 3 per cent annual wage growth, there was very little detail about how this will be achieved."
"Unlike earlier in the year, investors are less willing to reward rhetoric without a clear plan for delivery."
Maltin says that any new rise is unlikely for at least a month.
"This period of consolidation may be a chance for underweight investors to increase their exposure," he said.
"However, with elections to the upper house of parliament not due before July, investors will have to remain patient for a sustained rise in Japanese equities."
The UK market has also seen severe falls over the same period, with the average fund in the IMA UK All Companies sector losing 4.7 per cent and the average IMA UK Equity Income fund losing 4.58 per cent, according to data from FE Analytics.
Both are fairly impressive figures given that the FTSE All Share has lost 7.11 per cent over that time, meaning that being in actively managed funds has helped investors.
The Vanguard FTSE UK Equity Index fund has lost 7.14 per cent, making it the second worst-performing retail fund in the IMA UK All Companies sector.
Only Ignis International Cartesian Enhanced Alpha has lost more, down 8.78 per cent over the period.
Performance of funds vs sector since 22 May
Source: FE Analytics
Trackers make up the majority of the bottom decile of funds.
One of the reasons for this could be that active managers have tended to avoid certain volatile sectors of the market that have suffered recently, chiefly miners and banks.
The FTSE 350 Banks index has lost 8.5 per cent over the period and the FTSE 350 Mining index 9.53 per cent.
On the upside, Unicorn Free Spirit stands head and shoulders above the rest, having made 0.09 per cent, the only fund in the sector to have produced positive gains in the period.
MFM Slater Recovery has lost just 0.44 per cent, the second-best result, and MFM Slater Growth just 1.35 per cent, the third-best figure.
Unicorn has had a good period in the IMA UK Equity Income sector, with FE Alpha Manager John McClure’s Unicorn UK Income fund producing the second-best results, losing 1.76 per cent.
This is marginally more than the 1.16 per cent lost by CF Miton UK Multi Cap Income and less than the 2.39 per cent lost by Henderson UK Strategic Income, the third-best performer.
The sector’s worst performer is the Vanguard FTSE UK Equity Income Index, which has lost 7.27 per cent.
Aberdeen UK Equity Income has also disappointed, losing 7.25 per cent. Old Mutual UK Equity Income has lost 7.04 per cent.
Performance of funds vs sector since 22 May
Source: FE Analytics
Ruffer Investment Company lost 5.23 per cent over the period, but is up 9.97 per cent in the year to date.
The trust has made 84.43 per cent over the past five years, with an annualised volatility of 9.21 per cent.
