The fund aims for growth by investing mainly in Japanese equities. It will also have the flexibility to invest up to 20 per cent in other Asian regions, including Hong Kong, Taiwan and Singapore, and in government bonds.
The portfolio will comprise 40 to 55 stocks diversified across sectors and is benchmarked against the Topix index. It can invest in companies of any size but manager Simon Somerville will pay particular attention to small and medium sized firms.
Somerville has managed the Jupiter Japan income fund since launch in 2005, when he joined Jupiter. He was previously head of global equities at Cazenove Fund Management, which he joined as a trainee in 1990.
For the new fund, Somerville selects stocks on a bottom-up basis, with a focus on growth at a reasonable price. He will look for firms with strong balance sheets and earnings prospects and the resulting portfolio will be monitored by Jupiter’s risk management team.
Somerville believes Japan is better value than other markets. He says the export market has suffered during the global economic downturn as there has been less demand for exports, but the domestic sector has shown resilience. This is because Japanese banks have not been exposed to the credit problems that have affected the West and lending is growing,
The Japanese equity market fell to a 25-year low in March but has rebounded on the back of improvements in the export market. Even though it is still expected to be a bad year for exporters in terms of earnings, investors may still reap rewards if they take the plunge while stocks are at low valuations.