BNY Mellon has launched two funds to exploit what it describes as 'only the beginning' of Japan's extraordinary market rally.
The Japan Small Cap Equity Focus fund and the Japan All Cap Equity fund will be managed by the five-strong BNY Mellon Japanese equity team.
The funds will be run as bottom-up strategies, with the objective of long-term capital growth, while the team will look to create value through market inefficiency and investment in high conviction stocks.
Shinzo Abe, the Japanese prime minister, last year began to revitalise the country's investment landscape after two decades of deflation with his 'three arrows' of reform dubbed 'Abenomics'.
As a result Japan became the top performing developed market of 2013, although the country suffered a correction amidst fears of US asset purchase tapering in May.
'The recent political and economic turnaround in Japan is widely accepted to be only the beginning of a long-term economic recovery,' Kashima said.
'With an unprecedented political will and support for reform in place, Japan is at a major inflection point. The most attractive aspect of the Japanese market is the prospect for a sustained, longer term recovery.'
The BNY Mellon Japan All Cap Equity Fund will consist of a minimum of 50 stocks with an annual turnover of around 30%–50%.
Meanwhile, the BNY Mellon Japan Small Cap Equity Focus fund will hold 20–30 stocks of less than 500 billion yen with expected turnover of around 30%–60% per year.
The funds can invest in Reits, cash, money market funds and equity index futures for cash management purposes and invest up to 10% of their net assets in recently issued company shares not listed or traded on recognised exchanges within a year.