Investment manager Neuberger Berman today announced a new addition to its suite of ESG-themed investment products, with a new UCITS running the firm’s Japanese Equity Engagement strategy. The Neuberger Berman Japan Equity Engagement Fund will invest in small and mid-cap Japanese-listed companies, aiming to achieve attractive returns through active engagement and constructive dialogue with management.

According to Neuberger Berman, the fund will have a bias towards companies that demonstrate ‘willingness to change’ and seeks to achieve a better risk-adjusted return relative to its benchmark over the long term. The fund will invest in companies with a market cap generally below JPY 1 Trillion, creating a highly concentrated portfolio, that draws upon the expertise of Neuberger Berman’s ESG investing and global equity research teams.

The firm stated that the fund’s high-conviction security selection will be defined by a rigorous three-staged screening and scoring process focusing on quality, governance, environmental, social, and valuation factors.

The new fund marks the latest addition to Neuberger Berman’s portfolio of ESG-linked products aimed at international investors. Current offerings include the Neuberger Berman Emerging Market Debt Sustainable Investment Grade Blend Fund, the Neuberger Berman Emerging Markets Sustainable Equity Fund, and the recently launched Neuberger Berman Global High Yield Sustainable Action Fund.

The fund will be managed by Tokyo-based Keita Kubota, Head of Japanese Equities at Neuberger Berman, who joined the firm in November 2019, and leads a four-member team of experienced portfolio managers. The fund’s core investment team will also be assisted by the newly appointed Director of Japan Investment Stewardship, Kei Okamura, who joined the firm in March of this year.

Mr. Kubota said:

“Corporate governance has never been more firmly on the Japanese government’s agenda, and we are seeing a new level of open-mindedness amongst companies to change and improve. We believe now is the time to find undervalued Japanese equities through using a fundamental research approach with active and constructive engagement. Our team’s local knowledge, coupled with Neuberger’s global equity research expertise, will be key to generating long-term returns for clients.”

Jonathan Bailey, Head of ESG Investing at Neuberger Berman, added:

“Following the launch of the NB Global High Yield Sustainable Fund earlier this year, the launch of the Japan Equity Engagement Fund further underlines our commitment to offering clients innovative sustainable investing strategies across asset classes. We believe too few investors are engaging Japanese small and mid-cap companies on material environmental, social and governance topics, which creates a significant opportunity for us to create value and impact for our clients. We are excited that Kei Okamura has joined the firm not only to be central to the investment process of this fund, but also to partner with colleagues on the ESG Investing team around the world. At a time of great economic and social uncertainty, the need for long-term active investors who can exercise judgement around ESG issues has never been greater.”