Coupland Cardiff’s £200m trust target questioned

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Coupland Cardiff’s £200m trust target questioned

Coupland Cardiff has said a £200m fundraising target for its forthcoming CC Japan Income & Growth investment trust is “realistic” despite scepticism from some analysts.

The boutique announced its plans to launch the high-conviction, long-only vehicle earlier this month. It will be run by Richard Aston, who already manages a $412m (£271m) open-ended equivalent.

The trust will seek to take advantage of the structural changes taking place in the Japanese market. Mr Aston sees an improvement in free cashflow, a more disciplined approach to business investment, and a “steady increase” in the aggregate dividend payout in the world’s third-largest economy.

But some have raised concerns about the trust’s £200m fundraising target.

Trusts focusing on traditional asset classes such as equities have struggled to raise more than £150m in recent years, though Neil Woodford’s £800m Patient Capital launch and Terry Smith’s £193m emerging market equity vehicle are two notable exceptions.

One analyst, who wished to remain anonymous, said of the launch: “I would be very surprised if they got anywhere near [£200m], in which case the risk is that you have another sub-scale closed-ended fund.”

Other analysts have been more supportive, noting the advantages of using investment trusts for equity income mandates, as well as the growing appeal of Japanese dividend-payers.

Simon Elliott, head of research for Winterflood Securities’ investment trusts division, said: “Japanese equities have historically been lower yielders than some of their global counterparts. This has started to change in recent years and it is no surprise an equity income investment trust should look to exploit this trend.”

The trust will invest in stocks Mr Aston perceives to be undervalued. He will also seek to take advantage of new stewardship and corporate governance codes that have helped usher in “shareholder-friendly policies”.

He added: “Since many of these changes are structural, not cyclical, the investment opportunities represented are… more sustainable in nature than those typically associated with Japan.”

The firm’s existing open-ended fund launched at the end of January 2013. It has returned 38 per cent over two years compared to 22.9 per cent from the Topix index, according to Coupland Cardiff’s literature.