Investment trust brokers have backed Aberdeen’s decision to change the mandate on the £56m Aberdeen All Asia Investment Trust to focus on Japan.
However, Winterflood Securities warned that Aberdeen may struggle to raise the £100m it hopes for in a C-share issue because many of the trusts in the sector are currently trading on a discount.
Both Winterflood and Numis Securities agreed with Aberdeen’s move due to the lack of investor interest currently in a pan-Asian investment approach.
Numis said the firm’s proposed plan for the rebranded Aberdeen Japan Investment Trust, with its proposed all-cap investment approach and strategy of hedging the yen “may prove attractive” to investors.
Winterflood said the mandate change “makes sense” due to the reduction in the number of quality Japan trusts in recent years with the closure of trusts such as Perpetual Japanese and Morant Wright Japan Income.
However, the broker called into question whether Aberdeen would be able to achieve its aim of raising £100m in a C-share issue when other trusts are trading on a discount and some investors “might be sceptical in adopting a Japan-only mandate after the market has already risen by 40 per cent in yen terms this year”.
Winterflood said: “In our view to raise more than £50m will be a good result not least as a market cap of approximately £100m will allow the fund to appeal to a wider group of potential investors.”