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 28/03/2023)



(as of 28/03/2023)


1 Day NAV Change

(as of 28/03/2023)


Long-term capital appreciation


The Sub-Fund promotes environmental and social characteristics according to Article 8 of SFDR. Furthermore, the Sub-Fund uses both activity- and norm-based exclusions. Information relating to the environmental and social characteristics of this Sub-Fund is available in the prospectus.


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 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.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 30/04/2015
Fund Assets $150.23 million (28/02/2023)
Base Currency USD
ISIN: LU1220257130 (USD) LU1220257486 (GBP) LU1525503915 (USD Hedged) LU1525504053 (EUR Hedged)
Benchmark MSCI Japan Index
Geographic Focus Japan
SFDR Classification Article 8
Fees & Expenses
Management Fee 0.75%
Total Expense Ratio As of 31/03/2022 0.80% ( USD ) 0.80% ( GBP ) 0.80% ( USD Hedged ) 0.80% ( EUR Hedged )


  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
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As of 28/02/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
-3.51% 0.15% 2.05% -14.85% 4.33% -1.57% n.a. 3.88% 30/04/2015
MSCI Japan Index (USD)
-3.83% 2.44% 2.14% -8.93% 3.80% 0.42% n.a. 3.34%
Matthews Japan Fund (GBP)
-1.95% -0.70% 1.48% -5.83% 6.51% 1.05% n.a. 7.10% 30/04/2015
MSCI Japan Index (GBP)
-2.21% 0.77% 1.49% 0.93% 5.67% 3.06% n.a. 6.53%
Matthews Japan Fund (USD Hedged)
1.27% -0.31% 6.54% 3.57% 13.40% 4.72% n.a. 8.25% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
1.11% 1.02% 6.33% 11.37% 13.75% 7.23% n.a. 9.18%
Matthews Japan Fund (EUR Hedged)
1.21% -0.97% 6.10% 1.86% 12.11% 2.74% n.a. 6.19% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
0.93% 0.44% 5.85% 8.32% 11.90% 4.90% n.a. 6.80%
As of 31/12/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
-1.86% 10.00% -26.87% -26.87% -1.61% -1.03% n.a. 3.69% 30/04/2015
MSCI Japan Index (USD)
0.29% 13.26% -16.31% -16.31% -0.63% 0.60% n.a. 3.12%
Matthews Japan Fund (GBP)
-2.15% 0.90% -18.12% -18.12% 1.44% 1.26% n.a. 7.05% 30/04/2015
MSCI Japan Index (GBP)
-0.71% 5.11% -5.76% -5.76% 2.62% 2.99% n.a. 6.47%
Matthews Japan Fund (USD Hedged)
-6.43% 1.49% -14.54% -14.54% 5.49% 3.35% n.a. 7.30% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-4.99% 4.30% -1.62% -1.62% 7.29% 5.45% n.a. 8.28%
Matthews Japan Fund (EUR Hedged)
-6.67% 0.75% -15.79% -15.79% 4.34% 1.41% n.a. 5.28% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-5.11% 3.46% -4.06% -4.06% 5.53% 3.15% n.a. 5.94%
For the years ended December 31st
Name 2022 2021 2020 2019 2018 2017 2016
Matthews Japan Fund (USD)
-26.87% -1.96% 32.83% 25.54% -20.58% 33.40% 0.19%
MSCI Japan Index (USD)
-16.31% 2.04% 14.91% 20.07% -12.58% 24.39% 2.73%
Matthews Japan Fund (GBP)
-18.12% -0.63% 28.30% 21.61% -16.16% 21.57% 20.43%
MSCI Japan Index (GBP)
-5.76% 2.98% 11.36% 15.44% -7.14% 13.62% 22.53%
Matthews Japan Fund (USD Hedged)
-14.54% 9.63% 25.29% 26.94% -20.85% n.a. n.a.
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-1.62% 13.96% 10.14% 21.81% -13.31% n.a. n.a.
Matthews Japan Fund (EUR Hedged)
-15.79% 8.65% 24.18% 23.10% -23.30% n.a. n.a.
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-4.06% 13.13% 8.27% 18.17% -15.92% n.a. n.a.
For the period ended 31/12/2022
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Japan Fund (USD)
-26.87% -1.96% 32.83% 25.54% -20.58% 30/04/2015
MSCI Japan Index (USD)
-16.31% 2.04% 14.91% 20.07% -12.58%
Matthews Japan Fund (GBP)
-18.12% -0.63% 28.30% 21.61% -16.16% 30/04/2015
MSCI Japan Index (GBP)
-5.76% 2.98% 11.36% 15.44% -7.14%
Matthews Japan Fund (USD Hedged)
-14.54% 9.63% 25.29% 26.94% -20.85% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-1.62% 13.96% 10.14% 21.81% -13.31%
Matthews Japan Fund (EUR Hedged)
-15.79% 8.65% 24.18% 23.10% -23.30% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-4.06% 13.13% 8.27% 18.17% -15.92%

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 28/02/2023)
Fund Benchmark
Number of Positions 50 237
Weighted Average Market Cap $39.3 billion $44.6 billion
Active Share 65.8 n.a.
P/E using FY1 estimates 16.6x 12.4x
P/E using FY2 estimates 15.9x 12.6x
Price/Cash Flow 11.4 8.2
Price/Book 2.0 1.3
Return On Equity 13.5 12.4
EPS Growth (3 Yr) 14.6% 11.0%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 28/02/2023)
Upside Capture
Downside Capture
Sharpe Ratio
Information Ratio
Tracking Error

Fund Risk Metrics are reflective of Class I USD ACC shares.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 28/02/2023)
Name Sector % Net Assets
Sony Group Corp. Consumer Discretionary 4.5
Keyence Corp. Information Technology 4.0
Shin-Etsu Chemical Co., Ltd. Materials 4.0
Tokio Marine Holdings, Inc. Financials 3.5
Hitachi, Ltd. Industrials 3.4
Hoya Corp. Health Care 3.3
Daikin Industries, Ltd. Industrials 3.1
Daiichi Sankyo Co., Ltd. Health Care 3.1
Nippon Telegraph & Telephone Corp. Communication Services 3.0
Sumitomo Mitsui Financial Group, Inc. Financials 3.0
TOTAL 34.9

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 28/02/2023)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Industrials 16.7 22.2 -5.5
Consumer Discretionary 15.8 18.1 -2.3
Information Technology 14.8 13.6 1.2
Financials 13.1 12.4 0.7
Health Care 12.8 9.2 3.6
Communication Services 8.5 8.0 0.5
Consumer Staples 6.0 6.6 -0.6
Materials 5.2 4.9 0.3
Real Estate 0.8 3.1 -2.3
Utilities 0.0 1.0 -1.0
Energy 0.0 0.8 -0.8
Cash and Other Assets, Less Liabilities 6.4 0.0 6.4

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 51.9 53.5 -1.6
Large Cap ($10B-$25B) 17.8 27.8 -10.0
Mid Cap ($3B-$10B) 16.9 18.6 -1.7
Small Cap (under $3B) 7.1 0.1 7.0
Cash and Other Assets, Less Liabilities 6.4 0.0 6.4

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.

ESG Characteristics

(as of 31/12/2022)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 94.2% Benchmark Coverage: 99.4%
0.0 0.0 0.0
Fund Coverage: 98.9% Benchmark Coverage: 99.9%
0.0 0.8 -0.8
Name Fund Benchmark Difference
UN Global Compact Violators
Fund Coverage: 100.0% Benchmark Coverage: 100.0%
0.0 0.2 -0.2
Board Diversity
Fund Coverage: 100.0% Benchmark Coverage: 98.8%
15.7 17.3 -1.5

Board Diversity: Represents the weighted average ratio of female board members to male board members in investee companies.
Tobacco: Represents companies that generate revenue from tobacco manufacturing or production or that generate more than 50% of revenue from tobacco retail.
UN Global Compact Violators: Represents companies that have been assessed as failing to comply with the 10 United Nations Global Compact Principles by ISS-ESG Norms-Based Research. Different ESG research providers may come to different conclusions on the severity of the violation.

Source: Sustainalytics, Factset, MSCI, Matthews Asia.

GHG Intensity

(as of 31/12/2022)

Fund Coverage: 98.16; Benchmark Coverage: 99.73 as of 31/12/2022

GHG Intensity: Represents the normalized portfolio’s total weighted average (scope 1 + scope 2) carbon emissions intensity, using the most recently available data (emissions data from 2020). Carbon intensity represents the issuer’s total carbon emissions per EUR million of revenue (tCO2e divided by EUR million in revenue).

Source: Sustainalytics, MSCI, Matthews Asia.

Sustainability-related Disclosures

This Fund Yes No
Complies with Article 8 of SFDR  
Investment process integrates ESG factors and sustainability risks based on proprietary and third-party research  
Applies norms- and activity-based exclusions  
Promotes environmental and social characteristics  
Has a sustainable investment objective  
Conducts engagement  
Exercises Voting Rights  

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 Fund’s investment objective and risk factors.

For more information, please refer to our Responsible Investment and Stewardship Policy and our Sustainable Finance Disclosure Regulation – Article 10.


  • 3 YEAR
  • 5 YEAR

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 ©2023 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 31 December 2022

For the year ending 31 December 2022, the Matthews Japan Fund returned -26.87%, while its benchmark, the MSCI Japan Index returned -16.31%. For the fourth quarter of the year, the Fund returned 10.00% versus 13.26% for the benchmark.

Market Environment:

Japan equity markets in 2022 delivered very different performances depending on the currency and style of investment used. Taking currency first, the Japanese yen weakened to 150 to the U.S. dollar in October, a level last seen in 1998. Multiple rate hikes by the U.S. Federal Reserve in tandem with the accommodative stance of the Bank of Japan resulted in the widening of the U.S.-Japan bond-yield spread. For investors, the yen’s decline meant that in local currency terms Japanese equities outperformed developed markets while in U.S. dollar terms they traded more in line. The other trend to have impacted Japanese equity markets was the continued significant spread between performance of value stocks and growth stocks. The one-year performance gap between value stocks and growth stocks in 2022 ended at 2,260 basis points (22.26%), the largest in international equity markets. The Matthews Japan Fund is a quality core growth portfolio and the widening of the growth-value spread has been a challenge.  

Performance Contributors and Detractors:

From a sector perspective, our stock selection in consumer staples was the largest contributor to relative performance in 2022. Stock selection in real estate was also a contributor though its impact was mitigated by our underweight in the sector. On the other hand, stock selection in industrials was the biggest detractor while our selections in financials, materials and information technology (IT) were also detractors.

At the holdings level, Daiichi Sankyo, a pharmaceutical company, was a top contributor to the investment results. We view the company as evolving into a specialty pharma company focused on oncology and based on their proprietary antibody-drug conjugate (ADC) platform. The success of Daiichi Sankyo's first ADC—Enhertu, an anticancer agent for breast cancer—coupled with a favorable court ruling in a dispute with a competitor regarding ADC technology in August drove the strong performance in the year.

P&C insurance company Tokio Marine Holdings was also a large contributor to performance. We regard the company as a prudent allocator of capital with a mid-teens dividend compound annual growth rate (CAGR) coupled with earnings-per-share (EPS) growth that is driven by both earnings and buybacks.

Game developer Capcom was another positive contributor. Owner of key intellectual property (IP), such as “Monster Hunter” and “Resident Evil”, the company pledges to deliver stable and continuous double-digit growth. Given the uncertainty in macro situations, Capcom’s stable growth has resulted in equity outperformance.

Technology conglomerate Sony Group was the largest detractor last year. After approaching an all-time high in January, performance has struggled due to weakness in the mainstay PlayStation game business. While we remain constructive on Sony's management capability and its competitive position in games, music and image sensors, the weakness in their highest return-on-invested-capital (ROIC) business segment makes it difficult for the share price to perform.

Recruit, a leading HR and media marketing solution provider was the second-largest detractor. The company benefited from the reopening of economic activity in 2021 with their crown jewel HR Tech segment but growth slowed due to the peaking out of global economic activity.

JSR, an electronic material manufacturer, was also a detractor. The company’s recent earnings were below expectations due to the slower-than-expected commercial production ramp of its highly-anticipated Contract Development and Manufacturing (CDMO) for bio-pharma products, as well as the weaker topline in display materials segment. Despite the near-term weakness, our conversation with the management suggests that the issues in the health-care businesses are transitory and the display business topline will bottom out. We still calculate that JSR trades below its intrinsic value and believe that a re-rating would accelerate as JSR’s health-care profit contribution increases in the later part of this fiscal year.  

Notable Portfolio Changes:

During the fourth quarter, we re-initiated furniture and household goods retailer Nitori Holdings. We exited the name in 2021 due to the negative impact from a weaker yen and tough year-on-year after COVID lockdowns had pushed up their home fashion goods demand in 2020. After a year, both consensus earnings and valuation levels came down enough to warrant a review, especially as cost pressures and the weakness of the Japanese yen have started to peak out, in our view. The long-term thesis remains unchanged. Nitori is the last man standing in the furniture retail space in Japan and has achieved 35 consecutive years of earnings growth. The company’s track record in cost adjustment is also impressive.

We also initiated a position in Sumitomo Mitsui Financial Group in anticipation of potential changes in Japan’s monetary policy. The Bank of Japan revised its yield curve control (YCC) targets at its December 20 monetary policy meeting. While the move came as a surprise to the market including us, we had discussed  the possibility of this happening. As current BoJ Governor Haruhiko Kuroda's term expires in the Spring, increasing news flow around the upcoming change in leadership will drive expectations for a change in the bank’s negative interest rate policy and steps toward monetary policy normalization.

To fund these positions, we have exited Toyota Motor, Suntory Beverage and Food, SMC, Septeni Holdings, Roland, Ono Pharmaceutical, Mazda Motor, Kyoritsu Maintenance, Japan Steel Works, GMO Payment Gateway and Direct Marketing Mix.


While the market seems ready for the Fed to pivot with its interest-rate policy and for inflation to peak out, we believe the Fed is hesitant to prematurely remove its hawkish policies to contain inflation. With this backdrop, we don’t see a reversal of growth underperformance in Japan anytime soon and are taking a more balanced approach towards multiple stages of growth and valuation levels. For the year of 2023, earnings growth and cash flow-generation ability will be ever more important as financial estimates for Japanese corporates have started to be revised down.

Looking long term, we continue to believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle. Last year, the Japanese equity market outperformed both developed markets (MSCI World) and emerging markets (MSCI Emerging Market) in U.S. dollar terms. With the yen at a near quarter-century-low to the dollar, Japanese companies are in good health and, importantly, the country is firmly open for tourism. We believe this is the time for investors to add a long-term exposure to the market.


Rolling 12 Month Returns For the period ended 31/12/2022 - I (Acc)
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Japan Fund (USD)
-26.87% -1.96% 32.83% 25.54% -20.58% 30/04/2015
MSCI Japan Index (USD)
-16.31% 2.04% 14.91% 20.07% -12.58%
Matthews Japan Fund (GBP)
-18.12% -0.63% 28.30% 21.61% -16.16% 30/04/2015
MSCI Japan Index (GBP)
-5.76% 2.98% 11.36% 15.44% -7.14%
Matthews Japan Fund (USD Hedged)
-14.54% 9.63% 25.29% 26.94% -20.85% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-1.62% 13.96% 10.14% 21.81% -13.31%
Matthews Japan Fund (EUR Hedged)
-15.79% 8.65% 24.18% 23.10% -23.30% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-4.06% 13.13% 8.27% 18.17% -15.92%

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. 

Index Definitions