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Fund manager James Salter believes it’s a good time to be an “off-track” investor – someone who doesn’t follow the herd.
Like many investment experts, he worries that the U.S. stock market is currently priced “to perfection” (fully valued) and could collapse if President-elect Donald Trump’s measures to stimulate the U.S. economy don’t work their magic.
Salter, who founded investment firm Zennor Asset Management in 2020, says: “You could argue that large American technology companies represent a special situation due to their involvement in Artificial Intelligence (AI).
‘But the investment risks are significant, especially if the story of positive economic growth that Trump tells us does not materialize, leading to a broader global economic slowdown. “Then all stock markets would be affected.”
While Salter accepts that the two funds he and his co-founder David Mitchinson run – Zennor Japan and Zennor Japan Equity Income – would not escape such a correction in global share prices, he believes their eclectic composition would make them more resilient than many other funds. investment.
“I firmly believe in the American investor Warren Buffett,” he says. ‘Preserving our investors’ capital is crucial, which is why I never forget Buffett’s two rules for successful investing. Rule number one: don’t lose money. And if you ask about the second rule: don’t forget the first.
Both funds are based on these two “rules”, but Japan Equity Income is the more conservative.
Their modus operandi relies heavily on identifying under-the-radar Japanese companies that have huge amounts of cash on their balance sheets, and then gently persuading them to use some of that cash to pay dividends to shareholders or buy back shares.
“I call it off-road investing,” says Salter, “and it provides consistent returns to investors.”
The performance figures prove it. Since launching in spring 2023, Japan Equity Income has generated a total investor return of 19 percent, better than the average Japanese fund over the same period of 17 percent.
Fishing for cash-rich small Japanese companies is not something most Japanese fund managers are willing to do. But Salter and Mitchinson, with 60 years between them running Japanese funds, are thriving because of it.

“Between us we travel to Japan at least six times a year to visit companies,” says Salter. “We also have advisors both here in the UK and in Japan looking for ideas and we do a lot of research into Japanese stocks to identify potential winners.”
Japan Equity Income, a £125m fund, is invested in 42 stocks. Foundry and civil engineering company Kurimoto, a top 10 holding company, is one of the typical companies managers look for: rich in cash and with little coverage by market analysts.
“We’ve been to see management a couple of times,” says Salter, “and we have regular virtual meetings with them.” Slowly but surely, we have encouraged the company to reduce its balance sheet. You could say it’s a boring, slow-growing business, but it gives us a dividend equivalent to 5 per cent a year and the prospect of more in the future.’
Zennor has around £800 million in assets under its belt and does not wish to expand its investment focus outside of Japan. “If we implemented other investment strategies,” says Salter, “we would end up being jacks of all trades, but masters of none.”
The fund is on most investment platforms and its annual charges total 0.92 percent.
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