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Discover the new Zennor AM Japan Equity Income Fund
Investment Funds

Discover the new Zennor AM Japan Equity Income Fund

The fund provides a tailwind for higher dividends and more share buybacks. It will be managed by James Salter and David Mitchinson.
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22 MAY, 2023

By RankiaPro Europe

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Zennor Asset Management has launched the LF Zennor Japan Equity Income Fund to capitalize on a growing opportunity for income investors, driven by the ongoing governance revolution that is reinvigorating corporate Japan.

Key points

The new fund will be managed by highly experienced Japan fund managers James Salter and David Mitchinson. The duo will aim to deliver a meaningful and growing level of income, whilst preserving and growing capital by investing in overlooked, underachieving, and mispriced companies, where there is a clear catalyst for change.

The launch of the UK-domiciled OEIC comes with the ongoing corporate change in Japan gathering pace following moves this year by the Tokyo Stock Exchange to encourage listed companies to improve their disclosure, reporting, and governance structure. Additionally, they have asked companies to disclose their cost of capital and introduced new rules after demanding concrete action from companies that persistently trade below book value. To improve their returns, many companies need to stop their balance sheets from growing and look to shrink their asset bases. Zennor believes such action will include increasing dividend pay-outs, embarking on share buybacks, or investing to expand operations.

Unlike their Western counterparts, many of Japan's companies are awash with cash and able to meaningfully increase dividends. More than half of Japanese companies listed on the Topix have net cash on their balance sheets compared to around 20 percent of companies on the S&P500 and FTSE All-Share. And not only do they have significant cash – they also have lots of historic investment securities and unrealized gains on land, which has in many cases been on the balance sheets for more than a century.

In establishing the LF Zennor Japan Equity Income Fund, Zennor has partnered with independent distributor Spring Capital Partners to bring the fund to the attention of fund buyers and asset allocators, and Link Fund Solutions to oversee the fund's administration.

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