BNY Mellon launches two Japan funds

BNY Mellon is launching two new Japan funds: the BNY Mellon Japan Small Cap Equity Focus fund and the BNY Mellon Japan All Cap Equity fund.

The funds will be managed by the group's five-strong equity team based in Japan, led by Miyuki Kashima, which "focuses on fundamental, bottom-up stock selection".

Both funds will have the objective of achieving long-term capital growth by investing in companies listed or located in the country.

"The management team will aim to generate value by consistently selecting the stocks where they have identified longer term growth above market expectations," added BNY Mellon.

The All Cap fund will contain a minimum of 50 stocks from a possible universe of around 250. It expects an annual portfolio turnover of between 30 and 50%.

The Small Cap fund will be more concentrated, with between 20 and 30 stocks from a smaller investment universe of around 150 stocks, with a market cap of less than 500 billion yen (£3 billion). The turnover may be higher at up to 60% annually.

Kashima, who will be leading the management of the two new launches, says Japan is "widely accepted to be at the beginning of a long-term economic recovery," and that there will be investment opportunities in the region once deflations ends.

Performance in the region has been relatively strong over the past year since Prime Minister Abe announced his intentions to get the country's economy back on track.

The average return for a fund in the Japan sector over the past year to 1 January 2013 was 26.4%, and in Japan Smaller Companies was 37.1%. The top performing fund for each sector respectively was Legg Mason Japan Equity, which returned 63.7% over the past year, and Invesco Perpetual Japan Smaller Companies with 61.6%.

BNY Mellon does not currently have any funds focused in Asia Pacific, emerging markets or Japan. Its Long Term Global Equity fund has returned 15.2% in the past year, ranked in the bottom quartile at 177 of 210 in the Global sector.