The boards of Fidelity Japan Trust (FJV) and AVI Japan Opportunity Trust (AJOT) have agreed the terms of a merger.
The deal would see a rollover of assets from FJV into AJOT.
In an announcement today (August 12), it said the transaction is supported by FJV’s largest shareholder City of London Investment Management.
It added: “A combination of AJOT and FJV should result in both sets of shareholders benefiting from a more liquid, larger fund, targeting attractive investment opportunities in Japanese equities.
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“The enlarged AJOT is also expected to have increased capability to take influential positions in companies where AVI has identified a significant opportunity to unlock value through AVI’s active engagement, in line with AJOT’s existing investment strategy.”
The announcement said following the completion of the merger AVI has agreed to reduce its management fee from 1 per cent a year to a tiered structure on assets above £1mn.
New shares are set to be issued after FJV is voluntarily liquidated.
Paul Angell, head of investment research at AJ Bell, said: “There’s a number of things to like for investors in the combined trust here; more liquidity, a stronger performance track record at AVI and the option of a cash exit for holders of the Fidelity Japan Trust (subject to 50 per cent aggregate limit).
“There are a number of drawbacks for shareholders of the Fidelity Japan Trust to weigh up however, with a change in investment exposure from all-cap growth to small cap value, as well as higher fees in the new combined entity.”
tara.o’connor@ft.com
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AloJapan.com