Investments with Eastern promise

Clifford German looks at some funds with a yen for Japanese markets

Clifford German
Sunday 23 October 2011 08:19

It is inevitable that Japan will return to economic growth and Japanese shares will eventually return to favour. It is a basic assumption of most fund managers. While New York and London are close to all-time highs, and the Tokyo market has rallied by about 25 per cent since it bottomed out last summer, Japan is barely 50 per cent of its all-time high, says Ed Merner, of Atlantis Fund Management, the independently- owned, Guernsey-based managers.

The only question is when, and there have been several false dawns already. But no fewer than three funds are raising money this month. For the first time in years a rebound in investment by Japanese companies is coinciding with a further round of public sector spending on the infrastructure, the current exchange rate has made Japanese companies competitive and profitable at home and abroad, company earnings are set to double over the next two years, and there is scope for increased consumer spending, according to Gartmore Investment Trust Management's managing director, Michael Wrobel.

After keeping a low profile on Japan for five years Gartmore is launching its Select Japanese Investment Trust to parallel its unit trust. It hopes to raise up to pounds 75m at 100p a share with one free warrant for every five shares. The minimum subscription is pounds 1,000 and the initial expenses are capped at 4.5 per cent with an annual charge of 1 per cent.

It will invest in 60 to 70 companies with the initial emphasis on smaller and medium-sized companies in the domestic manufacturing, electronics and real estate sectors. Mr Wrobel is bullish about demand for personal computers and mobile phones where take-up is well below US levels.

Atlantis is hoping to raise $150m through an approved investment trust to invest in Japan for long-term capital growth, favouring healthcare, leisure and media sectors and some technology companies. It will avoid banks and utilities. The minimum subscription is pounds 1,500, investors will receive one free warrant for every five shares, the initial charge is likely to be around 4 per cent and the management charge 1.5 per cent a year.

Although Japan funds are not fully eligible as PEP investments, up to pounds 1,500 can be held as part of a pounds 6,000 general PEP. Investors can ask their PEP manager to buy shares for their PEP or can transfer shares they buy in the public offer to their PEP within 42 days of the allotment.

Meanwhile, General Accident Life has launched a guaranteed growth bond to invest in the Tokyo market over the 66 months to November 2001. Investors will receive the growth in the Nikkei 300 index on 95 per cent of their investment and a guaranteed return of 125 per cent on the full amount subscribed.

Charges are included in the terms of the offer and the minimum investment is pounds 2,500. There is an early investment bonus for applications received before 20 May.

General Accident Life: 0500 100200

Gartmore: 0800 289336 Atlantis: 0800 448866

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