In recent years, many economists and government officials in Japan have focused on harnessing the power of working women as an offset to the projected decline of the labor force.
According to the National Institute of Population and Social Security Research in Japan, the country’s prime working-age population is forecasted to shrink 30% by 2060, particularly as there is little immigration to supplement the birth rate.
BNY Mellon Investment Management sees this as an investment opportunity.
The firm recently launched the Dreyfus Japan Womenomics Fund, which is a mirror to a fund that launched in Japan four years ago.
“The reason we’re [launching this fund in the U.S.] now is that we find that our investor base — both on the institutional and the retail side — really has a hunger for thematic-type funds or funds with an [environmental, social and governance] component,” Alicia Levine, chief strategist at BNY Mellon Investment Management, told ThinkAdvisor. The Womenomics Fund “meets the criteria of having a [four-year] track record we can talk about in the prospectus and also meets the growing interesting everywhere … in investing more thematically.”
The fund normally will invest in Japanese-listed companies that BNY Mellon Asset Management Japan Ltd. — who will subadvise the fund — believes will benefit from the Japanese Government’s “Womenomics” initiative.
Miyuki Kashima, a portfolio manager of the new fund, told ThinkAdvisor that “the Womenomics fund is really interesting because I think perhaps in the States you really don’t hear much about what’s happening in terms of improvement in the gender gap [in Japan].”
The Womenomics initiative seeks to enhance economic growth in Japan through improved gender parity in the workforce. It includes efforts to ease barriers to female employment outside the home, promote women to leadership positions, and close the gender pay gap. Recent government policies to support the initiative have included a labor reform law, expanding day care facilities, and a law requiring action plans from companies of a certain size to increase female employment.
Kashima explained that Japan’s “prime minister top-down has said that we need more women to participate in the workforce, to promote more women to leadership positions, and really get them involved, [and] reduce the gender pay gap.”
For example, Japan has principal targets for 2020 that include raising the female employment rate from 68% to 73% in the 25- to 44-year-old age group, and raising the percent of women in leadership positions to 30%. The Japanese government increased childcare leave benefits and rolled out an infrastructure plan to open an incremental 500,000 spots in day care facilities by 2019.
With the Japan Womenomics Fund, BNY Mellon Asset Management Japan will invest in Japanese companies it believes will benefit from the Womenomics initiative, including those that actively hire and promote women, those that provide products or services that target women, and those that benefit directly or indirectly from the economic potential of improved gender parity in the workforce.
“Because of the nature of the fund it will tend to have larger weighting in things like retail and services and that’s probably going to be a trend that you’ll see over time,” Kashima said. “But we’ll also have overweight in areas which are not quite as obvious. Some of these industries include construction, which might surprise you.”
In Japan, the construction industry has very few women, Kashima explained. Because of the labor shortage overall and because of the improvements in some of the construction machinery and automation, companies have realized they need to include more women.
Right now, these construction companies are at the “low end of the scale” when it comes to the gender gap. But, according to Kashima, “over the next couple years, this is going to change and probably quicker than some of the other industries.”
According to Kashima, the fund also offers investors a differentiated way to access the Japanese market through an active, fundamental approach to isolate growth companies.
“I think Japan is a market which has been forgotten about for a long time,” she said. “And for good reason, because we went through two decades of stagnation. But Japan has now come out of that.”
Because the stagnation period was so long, Kahsima thinks that globally some sectors have forgotten or written off Japan.
“I think now that Japan is now back on the growth path again, it’s worth looking at Japan again,” she added.
The fund offers Class A (DJWAX), Class C (DJWCX), and Class I (DJWIX) shares with a minimum initial investment of $1,000. It also offers Class Y (DJWYX) shares generally with a minimum initial investment of $1 million.
The fund has a net expense ratio of 1% to 2% depending on share class.
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