Investment Trust Special Redux

Regular readers may remember my recent Back to the Future Series of posts the fourth of which was an Investment Trust Special, which looked at ways of investing around the world using investment trusts. This included a look at funds investing in the UK, Europe, Asia Pacific and Emerging markets.

I didn't cover funds investing in the US or Japan as the data presented in part 3 suggested that the expected returns from these markets were lower than the others I featured. However, Japan was not as low as the expected returns from the US and some suggest that it is a cheap market as corporates change the way they are managed and on the back of the benefits of the large QE undertaken by the Japanese central bank.

Personally I have tended to avoid investing in Japan as the valuations always seemed pretty high to me and you never seemed to be able to get much yield from investing there. The other thing that put me off was the long term hang over that they have had from the market coming off of a ridiculous overvaluation back in the 1980's and the debt mountain they have built up since then trying to generate growth. However, with the recent QE Japanese equities have been doing better and with the changes on the corporate front, it seems that it might now be possible to get a yield on Japanese equities.

Jumping on this band wagon is a newish fund management outfit called Coupland Cardiff or CC. They are launching a Japanese Income & Growth Investment Trust and are looking to raise £200m for this fund which is expected to yield 3%. The fund is going to be managed by a former colleague of mine  Richard Aston, who launched an open-ended fund of the same name for them in 2013. According to Citywire that fund has returned 82.6% since launch in January 2013, versus the 69% return of Japan's Topix index over that period. Over one year, the fund ranks fifth in Citywire's Japan sector.

• The Offer Period for the CC Japan Income & Growth Trust plc Ordinary Share Issue opened on Friday 13 November 2015
• It is expected that the Offer will be open until 10.00am on Monday 30 November 2015, but may close early without prior notice.

If that is of interest it looks like you need to apply through one of a range of retail brokers including TD Direct investing who have all the details and a video interview with the manager.

Now personally I'm not that keen on buying Investment Trusts at launch myself as fund managers usually are able to or want to launch a fund when it is a good time for them to raise money, but it may not necessarily be a good time for investors, as the best time to buy is when a market is heavily out of favour and nobody wants it - like emerging markets at the moment. The other reason I don't buy at launch is because you are basically paying a premium at the outset once the set up / launch cost are taken into account and by the time the manager has bought the portfolio. Since Investment Trusts often trade at a discount I prefer to wait patiently and see how it goes and then perhaps pick it up at a later date at a discount if that happens and the investment case still makes sense. An example of this in recent years was the high profile Fidelity China Special Situations which after all the hype and subsequent volatile perrformance was available at a double digit discount the last time I wrote in part 4.

Finally, as it's been a while since I inflicted any music on you and as we in the west seem to be Turning Japanese in ramping up our debt to try and get some growth, I thought this song was an appropriate one to finish on given today's topic - sayonara.