Lloyd George Japan focuses on M&A
Stocks benefiting from merger and acquisition activity will be one of the investment themes in Lloyd...
Stocks benefiting from merger and acquisition activity will be one of the investment themes in Lloyd George Management's Japan fund, jointly run with Sumitomo Life.
As first reported in Investment Week, Catherine Tan, Japanese equities fund manager at Lloyd George, will run 50% of LG SLI Japan, focusing on blue chip stocks. She said the transaction value of acquisitions of Japanese companies by foreign firms tripled between 1998 and 1999 which has led to restructuring opportunities. For example, Renault has taken a stake in Nissan Motors which has since set a series of restructuring targets such as reducing overall costs by 20%, achieving 21,000 job cuts by 2002 and halving the number of suppliers to 600.
Tan is also keen on trading company Itochu as a restructuring play and said: "Japan's seller of silk and steel is entering the new economy and is selling 300 unprofitable businesses. It has also set up merit-based compensation and floated Itochu Techno-Science to raise cash and reduce debt as part of restructuring plans in December 1999. On the first day of trading the market cap of this firm surpassed that of its parent."
Lloyd George has an investment process with around 30% devoted to judging the influence of macro-economic factors and 70% devoted to stock picking.
The other 50% of the portfolio is run by Susumu Tominaga, fund manager at Sumitomo Life Investment Company, and is focused on small and mid caps.
Tominaga currently runs the SLI Mid/Small Cap fund from Tokyo. Sumitomo Life is the third biggest life office in Japan and its investment arm has around $95bn in assets under management. Sumitomo Life Investment Company is bullish on the prospects for Japanese GDP, forecasting growth of 1.8% for 2000 and 2.5% for next year.
It expects the trend of declining equity ownership in Japan to be reversed, which should benefit the Japanese equity market. Between 1990 and 1998, household equity holdings as a percentage of disposable income in Japan fell from 57.5% to 25%. Sumitomo Life Investment Company added that ¥106 trillion in postal savings accounts will mature over the next two years, of which the group expects ¥10 trillion may move into riskier assets such as equities.
LG SLI Japan is the second fund to be launched as part of the Lloyd George Oeic unveiled earlier this year. LG Eastern Opportunities was the first fund to be launched as part of its Oeic range.
LG SLI Japan has two share classes, consisting of a retail and an institutional share class. The retail class has an initial charge of 3.5% and an annual management fee of 1.5%. IFA commission is 3% initial and 0.5% renewal. The minimum investment for the retail share class is £1,000.
The institutional share class has no front-end charge and an annual management charge of 1%.
The minimum investment is £500,000 for this share class. The fixed price offer period for the fund, ended on 12 May, during which shares were priced at 100p.
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