Investments  

Product review: BNY Mellon Japan funds

Asset management group BNY Mellon has launched two new Japan-centric funds to add to its already strong fund offerings.

The Japan Small Cap Equity Focus and Japan All Cap Equity funds were launched in early February.

Run by the asset manager’s Japan-based equity team, the funds will both focus on fundamental bottom-up stock selection, spanning both all- and small-cap strategies. The funds’ main objective is to pursue long-term capital growth by investing in shares and similar investments to companies either listed or located in Japan.

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Aiming to generate value by consistently selecting the stocks where the team has identified longer-term growth above market expectations, the funds will both take positions based on a one- to three-year outlook.

The initial charge for both funds is 5 per cent with an annual management charge of 1 per cent.

The funds are able to invest in equities, Reits, cash, money market funds and equity index futures.

The All Cap Equity fund will consist of a minimum of 50 stocks and its research universe is between 200 and 250 companies. The Small Cap Equity Focus fund will have 20 to 30 holdings due to a smaller investment universe - between 100 and 150 stocks - which is a filtered list of stocks with a market cap of less than 500bn yen.

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Comment:

Japan is at a crucial point in its economic history. A recent turnaround in both political and economic spaces, it has been widely acknowledged that it is just the beginning of a long-term recovery in the country.

Prime minister Shinz_ Abe is on track to be the first leader in many years to be looking at positive economic changes. His budgeting has been dubbed ‘Abenomics’ and has been superb so far for Japan.

These two funds are good for anyone looking to get into the market before it really takes off. Having a small-cap and an all-cap selection means the funds cater for investors with differing risk appetites. The team is strong with many able to identify market inefficiencies and take the appropriate positions.

The small-cap fund, with its focus on smaller companies which have more room to grow, will tap into one of the most attractive areas of this market.