Zennor Asset Management has launched the LF Zennor Japan Equity Income Fund.
The new offering will be managed by James Salter (pictured) and David Mitchinson. The duo will aim to deliver a “meaningful and growing level of income”, whilst preserving and growing capital.
They will seek to invest in overlooked, underachieving and mispriced companies, where there is a clear catalyst for change.
The boutique firm said the new offering aims to capitalise on a growing opportunity for income investors in the Asian nation, which is being driven by the ongoing “governance revolution” that is reinvigorating corporate Japan.
The managers believe new stock market rules which increase pressure on Japanese companies to return capital to shareholders provides a tailwind for higher dividends and more share buybacks. Over half of companies listed on the Topix have net cash on their balance sheets, they noted.
Zennor is working with its distribution partner Spring Capital to bring the fund to clients, while Link will be the administrator.
The ongoing fee is 0.75%. Around £25m has been raised so far, with other commitments given. It is available via Hargreaves Lansdown, with other major platforms expected to follow in the near future.
Zennor founder and CIO Salter said: “This is a story unique to Japan. Companies are under increasing pressure to reshape and shrink their balance sheets, which are in many cases in rude health. This is providing a very powerful tailwind for dividends and share buybacks – and is likely to have a positive impact on share prices too.
“We have earmarked many companies under the radar of mainstream global funds, where we expect the growth in dividends over the next three to five years to be much higher than the growth in earnings.”
Co-founder and fund manager Mitchinson added: “The perception that nothing ever changes in Japan is no longer true. We have managed money in Japan since the 1990s and are finally witnessing meaningful long-term change.
“As companies reshape their capital structures to an appropriate level, there is a compelling opportunity for investors, particularly income-seeking ones, to benefit from that change.”