In the current era of low savings rates, generating income is crucial. That’s why dividend-paying companies – whether UK-based or international – have become a key focus for investors. And, while “Japan has been disappointing for equity investors over the last couple of decades”, says the Investors Chronicle, Japanese companies are returning more cash to shareholders these days, which could mean they are becoming more “shareholder friendly”.
One way to tap into this trend is through the Jupiter Japan Income Fund. The unit trust aims to generate income 30% higher than the Topix index, as well as long-term growth, and has beaten its benchmark over three and five years. As the Investors Chronicle points out, it is also one of the highest-yielding funds in the Japan sector.
In August Morningstar upgraded its rating on the fund to silver from bronze, describing it as a “strong proposition” for investors looking for Japanese exposure.
Manager Simon Somerville – a “methodical and sensible stock-picker”, according to Morningstar – focuses on companies generating sufficient cash flow to pay dividends and that are willing to increase those payments over time.
He puts a strong emphasis on meeting companies and travels to Japan several times a year. Currently 25.8% of his portfolio is in industrials, with 21.5% in financials and 18.9% in consumer goods.
While concerns about falling Chinese demand and anti-Japanese riots in China have hit equities this year, Somerville is hopeful that a change in government in Japan will provide a “more positive political environment for equities”.
Contact: 084-4620 7602.
Jupiter Japan Income Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Sumitomo Mitsui Financial | 4.51 |
| NTT DoCoMo | 4.26 |
| Tokio Marine Holdings | 4.03 |
| Sumitomo Mitsui Trust Holdings | 3.90 |
| Canon | 3.57 |
| Nissan Motor | 3.47 |
| JS Group | 3.45 |
| Bridgestone | 3.35 |
| Murata Manufacturing | 3.29 |
| Sumitomo | 3.01 |