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Jupiter aims for Japan income

Jupiter Asset Management says its Japan income fund managed by Simon Somerville is the first of its kind in the UK retail market.

The fund aims to produce growth and income by investing in Japanese equities and will seek to achieve a yield of 2 per cent in the first year.

Somerville believes that the prospects for Japan are good with a sustainable rec- overy under way in the country, helped by the reforms implemented by prime minister Koizumi.

Japanese companies’ profits and margins are at record levels with firms paying rising dividends in response to a demand for income from Japan’s ageing population. In 2004-05, dividends across the market grew by 26 per cent and are expected to increase to 36 per cent next year. Shares also remain cheap.

Initial charge on the fund is 5.25 per cent with no trail and annual charge is 1.5 per cent.

Somerville says: “There have been a number of false dawns in Japan but I believe a sustainable recovery is now under way. This is not the export-led growth of the past but a full-blown domestic recovery, helped by the reforms implemented by prime minister Koizumi.

“Overseas investors are increasingly investing in Japan and equity indices have recently reached four-year highs. But the Topix index is still below its peak in 1989 and companies are trading on a price/earnings ratio of 17. There are tremendous long-term opportunities.”

Larking Gowen senior adviser Colin Trayler says: “A Japanese income fund is interesting because previously Japanese companies have been parsim- onious in paying dividends. If the country is now yield- ing 2 per cent people will be interested, although, for the perceived increased risk, my clients will want to wait and see what happens.”

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