Zennor AM launches Japan Equity Income fund

Zennor Asset Management has launched a Japan equity income fund, managed by CIO James Salter and co-founder David Mitchinson.

The LF Zennor Japan Equity Income fund is the second launched by the boutique manager, which was established in 2020.

With a combination of over 50 years running money in Japan, Salter previously worked as head of Japanese equities for 19 years at Polar Capital, while Mitchinson was at TT international, JP Morgan and AXA IM.

The launch follows moves this year from the Tokyo Stock Exchange to push listed companies to up their disclosure, reporting and governance structure, as well as introducing new rules that demand action from firms continually trading below book value.

Zennor argued for the strong income opportunities in the country, noting that more than half of listed Japanese companies have net cash on their balance sheets, compared to about 20% of companies on the S&P 500 and FTSE All-Share.

The firm partnered with Link Fund Solutions to oversee the fund's administration, while working with Spring Capital for distribution.

Salter said: "This is a story unique to Japan. Companies are under increasing pressure to reshape and shrink their balance sheets, which are in many cases in rude health.

"This is providing a very powerful tailwind for dividends and share buybacks - and is likely to have a positive impact on share prices too. We have earmarked many companies under the radar of mainstream global funds, where we expect the growth in dividends over the next three to five years to be much higher than the growth in earnings."

Mitchinson added: "The perception that nothing ever changes in Japan is no longer true. We have managed money in Japan since the 1990s and are finally witnessing meaningful long-term change.

"As companies reshape their capital structures to an appropriate level, there is a compelling opportunity for investors, particularly income-seeking ones, to benefit from that change."