Asia Growth

Matthews Japan Fund

  • High-conviction growth strategy seeks alpha in Japan
  • Unconstrained all-cap approach seeking Japanese companies positioned to benefit from Asia's growth
  • Invests in companies leveraged to the fast growing consumer demand across Asia, global industry leaders and entrepreneurial companies providing innovative domestic solutions


Inception Date


YTD Return (USD)

(as of 16/09/2021)


Price (USD)

(as of 16/09/2021)

$212.54 million

Fund Assets

(as of 31/08/2021)


Long-term capital appreciation


The Fund seeks to achieve its investment objective by investing, directly or indirectly, at least 65% of its total net assets, in publicly traded common stocks, preferred stocks and convertible securities of companies located in Japan, and may invest the remainder of its net assets in other permitted assets on a worldwide basis.


The value of an investment in the Fund can go down as well as up and possible loss of principal is a risk of investing. Investments in international and emerging market securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. The Fund invests in holdings denominated in foreign currency, and is exposed to the risk that the value of the foreign currency will increase or decrease. The Fund invests primarily in equity securities, which may result in increased volatility. Investments in a single-country fund may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

The risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 30/04/2015
Fund Assets $212.54 million (31/08/2021)
Base Currency USD
ISIN: LU1220257130 (USD) LU1220257486 (GBP) LU1525503915 (USD Hedged) LU1525504053 (EUR Hedged)
Benchmark MSCI Japan Index
Geographic Focus Japan
Fees & Expenses
Management Fee 0.75%
Total Expense Ratio As of 31/03/2021 1.06% ( USD ) 0.83% ( GBP ) 0.99% ( USD Hedged ) 1.09% ( EUR Hedged )


  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
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As of 31/08/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
3.83% 2.58% -2.72% 19.80% 9.18% 10.96% n.a. 9.63% 30/04/2015
MSCI Japan Index (USD)
3.08% 1.50% 3.25% 20.36% 8.04% 9.49% n.a. 6.95%
Matthews Japan Fund (GBP)
5.05% 5.55% -3.62% 15.84% 6.98% 9.82% n.a. 11.53% 30/04/2015
MSCI Japan Index (GBP)
4.13% 4.83% 2.55% 17.10% 6.00% 8.41% n.a. 8.83%
Matthews Japan Fund (USD Hedged)
3.94% 2.79% 3.75% 24.44% 9.77% n.a. n.a. 12.18% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
3.20% 1.98% 9.94% 25.01% 9.08% n.a. n.a. 10.43%
Matthews Japan Fund (EUR Hedged)
3.91% 2.57% 3.20% 23.05% 7.63% n.a. n.a. 9.89% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
3.15% 1.79% 9.50% 23.83% 6.81% n.a. n.a. 8.03%
As of 30/06/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
0.06% 0.29% -5.11% 27.15% 8.10% 9.83% n.a. 9.47% 30/04/2015
MSCI Japan Index (USD)
-0.27% -0.25% 1.45% 25.25% 7.63% 10.58% n.a. 6.84%
Matthews Japan Fund (GBP)
2.38% -0.41% -6.52% 12.55% 6.16% 9.07% n.a. 11.32% 30/04/2015
MSCI Japan Index (GBP)
2.62% -0.37% 0.39% 12.03% 6.02% 9.85% n.a. 8.70%
Matthews Japan Fund (USD Hedged)
0.93% 0.25% 1.88% 30.82% 9.11% n.a. n.a. 12.21% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
1.21% 0.24% 9.11% 29.16% 9.22% n.a. n.a. 10.67%
Matthews Japan Fund (EUR Hedged)
0.81% -0.07% 1.43% 29.23% 6.89% n.a. n.a. 9.86% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
1.14% 0.12% 8.81% 28.02% 6.81% n.a. n.a. 8.20%
For the years ended December 31st
Name 2020 2019 2018 2017 2016
Matthews Japan Fund (USD)
32.83% 25.54% -20.58% 33.40% 0.19%
MSCI Japan Index (USD)
14.91% 20.07% -12.58% 24.39% 2.73%
Matthews Japan Fund (GBP)
28.30% 21.61% -16.16% 21.57% 20.43%
MSCI Japan Index (GBP)
11.36% 15.44% -7.14% 13.62% 22.53%
Matthews Japan Fund (USD Hedged)
25.29% 26.94% -20.85% n.a. n.a.
MSCI Japan Index 100% Hedged to USD (USD Hedged)
10.14% 21.81% -13.31% n.a. n.a.
Matthews Japan Fund (EUR Hedged)
24.18% 23.10% -23.30% n.a. n.a.
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
8.27% 18.17% -15.92% n.a. n.a.
For the period ended 30/06/2021
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Japan Fund (USD)
27.15% 10.45% -10.05% 16.32% 8.78% 30/04/2015
MSCI Japan Index (USD)
25.25% 3.51% -3.83% 10.88% 19.58%
Matthews Japan Fund (GBP)
12.55% 14.12% -6.86% 14.74% 12.43% 30/04/2015
MSCI Japan Index (GBP)
12.03% 6.62% -0.24% 9.09% 23.06%
Matthews Japan Fund (USD Hedged)
30.82% 10.85% -10.44% 16.74% n.a. 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
29.16% 5.55% -4.44% 11.14% n.a.
Matthews Japan Fund (EUR Hedged)
29.23% 9.08% -13.36% 13.91% n.a. 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
28.02% 2.89% -7.50% 8.55% n.a.

Source: Brown Brothers Harriman (Luxembourg) S.C.A.

Since inception performance for share classes with less than one year of history represents actual performance, not annualised. In addition, for share classes less than a year old, Year to Date Return is calculated since inception. Where no past performance is shown there was insufficient data available in that year to provide performance.

Performance details provided are based on a NAV-to-NAV basis with any dividends reinvested, and are net of management fees and other expenses. Performance data has been calculated in the respective currencies stated above, including ongoing charges and excluding subscription fee and redemption fee you might have to pay.

All performance quoted represents past performance and is not indicative of future performance. Investors may not get back the full amount invested. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal.

Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.

Portfolio Characteristics

(as of 31/08/2021)
Fund Benchmark
Number of Positions 53 272
Weighted Average Market Cap $46.0 billion $53.3 billion
Active Share 68.9 n.a.
P/E using FY1 estimates 20.6x 15.3x
P/E using FY2 estimates 18.6x 14.2x
Price/Cash Flow 14.9 10.9
Price/Book 2.2 1.4
Return On Equity 12.4 10.6
EPS Growth (3 Yr) 10.6% 0.0%

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Factset Research Systems, Inc., Zephyr StyleADVISOR, Matthews Asia

Top 10 Holdings

(as of 31/08/2021)
Name Sector % Net Assets
Sony Group Corp. Consumer Discretionary 4.8
Recruit Holdings Co., Ltd. Industrials 3.9
Shin-Etsu Chemical Co., Ltd. Materials 3.8
Toyota Motor Corp. Consumer Discretionary 3.4
ORIX Corp. Financials 3.2
Hoya Corp. Health Care 3.1
Toyota Industries Corp. Consumer Discretionary 2.8
Keyence Corp. Information Technology 2.6
JSR Corp. Materials 2.5
Olympus Corp. Health Care 2.5
TOTAL 32.6

Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: Brown Brothers Harriman (Luxembourg) S.C.A

Portfolio Breakdown (%)

(as of 31/08/2021)
  • Sector Allocation
  • Market Cap Exposure

Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit

Source: FactSet Research Systems unless otherwise noted.
Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.


  • 3 YEAR
  • 5 YEAR
(as of 29/07/2021)

Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.

Overall Morningstar RatingTM is reflective of the noted share class. Fund ratings represent an opinion only and are not a recommendation to buy or sell any fund. Copyright ©2021 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is provided for reference purposes only.

The Overall Morningstar®️ Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.

Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Portfolio Managers

Taizo  Ishida photo
Taizo Ishida

Lead Manager

Shuntaro  Takeuchi photo
Shuntaro Takeuchi

Lead Manager


Period ended 30 June 2021

For the first half of 2021, the Matthews Japan Fund returned –5.11%, while its benchmark, the MSCI Japan Index, returned 1.45% over the same period. For the quarter ending 30 June, the Fund returned 0.29%, while its benchmark returned –0.25%.

Market Environment:

Japanese equity markets lagged global peers in the second quarter, as developed markets in the U.S. and Europe saw their COVID-19 vaccinations rise early in the quarter, along with increased economic activity. While Japan’s vaccinations lagged as its state of emergency status continued, the country is quickly catching up with the vaccination ratio going above 20% in late June, compared to approximately 5% in late May.

The country’s relative performance since mid-May has been roughly in-line within the developed markets. While the velocity of a rapid deep value rally (along with a sell-off in high-quality names) has slowed, Japanese growth stocks have yet to rally, mainly due to the lag in economic activity recovery.

Performance Contributors and Detractors:

For the first half of 2021, the Fund underperformed its benchmark, with our quality core growth portfolio weighed down by the market’s stark pivot toward value stocks amid a sudden surge in U.S. 10-year bond yields. The Fund delivered returns slightly above the benchmark index during the second quarter.

Year-to-date performance was dragged down by our two key overweight sectors, information technology and health care. The industrials sector, which contains commodity price-sensitive trading companies and cyclical transport companies, was also a detractor to performance. On the other hand, the portfolio’s underweight to the consumer staples sector, along with stock selection within the communication services and materials sectors were notable contributors to relative performance.

Turning to individual securities, Roland Corp., a manufacturer of electronic music instruments, was the largest contributor to the Fund year to date. Roland revised its full-year earnings guidance in May as the company continued to benefit from “stay at home” demand as well as its stellar execution in securing key components amid semiconductor shortages. Over the mid to long term, we believe the ongoing shift from acoustic to digital pianos and drum sets—which command higher margins—will be significant growth drivers for the company.

Leading human resources and media marketing solution provider Recruit was also a major contributor. The company is a beneficiary of the reopening of economic activity. Recruit’s crown jewel, HR Technology, provides technology solutions that help job seekers and employers in the hiring and recruitment process. The division, which consists of and Glassdoor and operates in more than 60 countries, guided for 40%-50% topline growth for current fiscal year.

Japanese multinational TDK Corp., the world’s leading supplier of small- to mid-sized batteries via its core subsidiary Amperex Technology Limited, was the largest detractor to the Fund’s absolute performance year to date. The company's near-term earnings have slowed down due to weaker-than-expected personal computer and smartphone demand. Additionally, increased investment in its mid-size battery expansion is likely to press margins downward. While we have trimmed TDK’s position in the portfolio during the year, we continue to hold a positive view due to its unique and dominant position in small- to mid-sized batteries.

M3, Inc., an operator of an internet medical services platform for doctors, also detracted from absolute returns. While fundamentals remain intact for its CRO (contract research organization) platform and career businesses, valuation multiples have significantly expanded over the past 12 months, which spurred profit taking amid the sell-off in high-quality growth stocks.

Notable Portfolio Changes:

Our portfolio actions during the quarter were driven by our continuing shift to increase our exposure to cyclical growth companies as economic activity started to improve—a process that began in July of 2020.

With respect to new holdings during the second quarter, we initiated a position in Toyota Motor Corp. for the first time since early 2017. The company is viewed as a laggard in the ongoing shift to electric vehicles, and has underperformed global peers over the past year. However, we believe Toyota is in fact ahead of peers in terms of electrification technology, and initiated our position in view of the company’s planned launch of key electric vehicle models. In May, Toyota announced that on a global basis, it expects to sell approximately eight million electrified vehicles by 2030, of which two million will be BEVs (battery electric vehicles) and FCEVs (fuel cell electric vehicles).

We also initiated a position in Ushio Inc., an industrial light source manufacturer. Ushio specializes in optical components and boasts a high market share in niche markets: UV (ultraviolet light) lamps for legacy semiconductor lithography, UV lamps for FPD (flat panel display) lithography and steppers for PCB (printed circuit board) production. After several years of underperformance and slow growth, we view the company as turning the corner under its new management team. We believe EUV (extreme ultraviolet) light source used in lithography for FC-PKG (flip chip package) will be a key contributor to structural growth going forward, in addition to the cyclical recovery of Ushio’s cinema and industrial-related businesses.

To fund these positions, we exited Disco Corp., Nihon M&A Center Inc. and Oracle Corp. Japan.


Looking ahead, our base case scenario is that the global economy will continue its path to recovery towards pre-COVID levels and the bond yields to normalize. Therefore, we have continued to shift our portfolio towards a cyclical earnings recovery, and did not trade into low-quality names for the sake of short-term fix.

As we wrote in the 2020 year-end commentary, we think 2021 will not be such a one-way street like 2020, where growth-oriented names performed strongly in a recessionary environment coupled with lower interest rates and ample money supply. With profit recovery already “baked into” current consensus estimates and valuation levels, upside surprise in profits will be more important in investment returns going forward. We will continue to look for investment opportunities in high-quality companies that can continue to execute well, but at the same time we will also seek opportunities in cyclical areas that have a potential to achieve high growth via lower and easier competition.

Going forward, we believe Japan can still enjoy higher prices as countries linked to the global economy, like Japan, should fare better as prospects for exports improve. From a structural point of view, we continue to believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle, driven by better corporate governance and a higher focus on capital efficiency. We believe multiyear trends such as productivity growth and innovation in health care, technology and material science—where Japanese corporations historically excelled versus global peers—not only remain intact, but will accelerate.

Rolling 12 Month Returns For the period ended 30/06/2021 - I (Acc)
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Japan Fund (USD)
27.15% 10.45% -10.05% 16.32% 8.78% 30/04/2015
MSCI Japan Index (USD)
25.25% 3.51% -3.83% 10.88% 19.58%
Matthews Japan Fund (GBP)
12.55% 14.12% -6.86% 14.74% 12.43% 30/04/2015
MSCI Japan Index (GBP)
12.03% 6.62% -0.24% 9.09% 23.06%
Matthews Japan Fund (USD Hedged)
30.82% 10.85% -10.44% 16.74% N.A. 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
29.16% 5.55% -4.44% 11.14% N.A.
Matthews Japan Fund (EUR Hedged)
29.23% 9.08% -13.36% 13.91% N.A. 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
28.02% 2.89% -7.50% 8.55% N.A.

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg


Performance figures discussed in the Fund Manager Commentary above reflect that of the Institutional Accumulation Class Shares and has been calculated in USD. Performance details provided for the Fund are based on a NAV-to-NAV basis, with any dividends reinvested, and are net of management fees and other expenses. Past performance information is not indicative of future performance. Investors may not get back the full amount invested.

The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.

Information contained herein is sourced from Matthews Asia unless otherwise stated. The views and opinions in this commentary were as of the report date, subject to change and may not reflect the writer’s current views. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund’s future investment intent. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. The information does not constitute a recommendation to buy or sell any securities mentioned.

Investors should not invest in the Fund solely based on the information in this material alone. Please refer to the Prospectus for further details of the risk factors. 

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