Japan's SuMi Trust targets Europe with small-cap fund launch

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SuMi Trust, the asset management arm of Japanese mega bank Sumitomo Mitsui Trust is launching its first small cap fund targeted at European investors, Citywire Global can reveal.

The planned launch comes at a time when the Japanese equity market is seeing increased investor interest following new prime minister, Shinzo Abe's pledge to beat deflation.

'We think that foreign investors will have increased appetite for risk. They will want to allocate a part of their portfolio to global small-cap strategies and within that, Japanese small caps,' said Sugihara Kuniyuki, portfolio manager at SuMi Trust.

The fund launch is part of an overseas expansion strategy by the bank which traditionally has had the majority of its clients based in Japan, added Kuniyuki.

The fund will replicate SuMi Trust's existing small-cap strategy, managed by Satoshi Marui and that, until now has only been available to Japanese investors.

At the end of December 2012 the Japan-domiciled fund had €111 million in assets.

Japanese small caps fell out of favour in 2006 following a series of company scandals. In the intervening years this has impacted on the realtiave attractiveness of the asset class among local investors. However Kuniyuki believes with on the ground expertise and careful stock selection, the fund can tap opportunities within the sector.

'We believe foreign investors will have increased appetite for risk and will want to allocate a part of their portfolio to this asset class.'

The fund is set to be launched in April with ¥30 billion (€200 million) in assets.