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 29/02/2024)



(as of 29/02/2024)


1 Day NAV Change

(as of 29/02/2024)


Long-term capital appreciation.


The Fund promotes environmental and social characteristics according to Article 8 of SFDR. Furthermore, the Fund uses both activity- and norm-based exclusions. Information relating to the environmental and social characteristics of this 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 $100.62 million (31/01/2024)
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 31/01/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
3.34% 17.24% 3.34% 17.41% -3.36% 7.10% n.a. 5.81% 30/04/2015
MSCI Japan Index (USD)
4.62% 18.56% 4.62% 18.96% 2.91% 7.01% n.a. 5.51%
Matthews Japan Fund (GBP)
3.55% 12.34% 3.55% 13.75% -0.83% 7.79% n.a. 8.15% 30/04/2015
MSCI Japan Index (GBP)
4.73% 12.97% 4.73% 15.00% 5.53% 7.71% n.a. 7.80%
Matthews Japan Fund (USD Hedged)
8.30% 16.53% 8.30% 39.89% 11.23% 16.03% n.a. 12.29% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
8.65% 15.98% 8.65% 40.76% 18.23% 16.11% n.a. 13.25%
Matthews Japan Fund (EUR Hedged)
8.17% 15.89% 8.17% 37.19% 9.53% 14.14% n.a. 10.13% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
8.68% 15.39% 8.68% 38.15% 16.15% 13.84% n.a. 10.84%
As of 31/12/2023
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
4.14% 7.74% 20.15% 20.15% -4.85% 7.51% n.a. 5.46% 30/04/2015
MSCI Japan Index (USD)
4.39% 8.22% 20.77% 20.77% 1.04% 7.31% n.a. 5.02%
Matthews Japan Fund (GBP)
3.62% 3.90% 13.70% 13.70% -2.56% 7.62% n.a. 7.79% 30/04/2015
MSCI Japan Index (GBP)
3.66% 3.62% 13.96% 13.96% 3.41% 7.29% n.a. 7.31%
Matthews Japan Fund (USD Hedged)
0.49% 3.88% 35.89% 35.89% 8.38% 15.15% n.a. 11.12% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
0.07% 4.11% 36.24% 36.24% 15.17% 15.43% n.a. 12.03%
Matthews Japan Fund (EUR Hedged)
0.22% 3.29% 32.96% 32.96% 6.75% 13.21% n.a. 8.99% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-0.10% 3.41% 33.32% 33.32% 13.11% 13.11% n.a. 9.62%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016
Matthews Japan Fund (USD)
20.15% -26.87% -1.96% 32.83% 25.54% -20.58% 33.40% 0.19%
MSCI Japan Index (USD)
20.77% -16.31% 2.04% 14.91% 20.07% -12.58% 24.39% 2.73%
Matthews Japan Fund (GBP)
13.70% -18.12% -0.63% 28.30% 21.61% -16.16% 21.57% 20.43%
MSCI Japan Index (GBP)
13.96% -5.76% 2.98% 11.36% 15.44% -7.14% 13.62% 22.53%
Matthews Japan Fund (USD Hedged)
35.89% -14.54% 9.63% 25.29% 26.94% -20.85% n.a. n.a.
MSCI Japan Index 100% Hedged to USD (USD Hedged)
36.24% -1.62% 13.96% 10.14% 21.81% -13.31% n.a. n.a.
Matthews Japan Fund (EUR Hedged)
32.96% -15.79% 8.65% 24.18% 23.10% -23.30% n.a. n.a.
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
33.32% -4.06% 13.13% 8.27% 18.17% -15.92% n.a. n.a.
For the period ended 31/12/2023
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Japan Fund (USD)
20.15% -26.87% -1.96% 32.83% 25.54% 30/04/2015
MSCI Japan Index (USD)
20.77% -16.31% 2.04% 14.91% 20.07%
Matthews Japan Fund (GBP)
13.70% -18.12% -0.63% 28.30% 21.61% 30/04/2015
MSCI Japan Index (GBP)
13.96% -5.76% 2.98% 11.36% 15.44%
Matthews Japan Fund (USD Hedged)
35.89% -14.54% 9.63% 25.29% 26.94% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
36.24% -1.62% 13.96% 10.14% 21.81%
Matthews Japan Fund (EUR Hedged)
32.96% -15.79% 8.65% 24.18% 23.10% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
33.32% -4.06% 13.13% 8.27% 18.17%

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

All returns over 1 year are annualized

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 31/01/2024)
Fund Benchmark
Number of Positions 43 225
Weighted Average Market Cap $52.9 billion $62.1 billion
Active Share 65.7 n.a.
P/E using FY1 estimates 17.7x 15.2x
P/E using FY2 estimates 16.4x 14.7x
Price/Cash Flow 11.7 10.1
Price/Book 1.9 1.5
Return On Equity 14.1 12.4
EPS Growth (3 Yr) 15.1% 13.2%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/12/2023)
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 31/01/2024)
Name Sector % Net Assets
Shin-Etsu Chemical Co., Ltd. Materials 5.3
Keyence Corp. Information Technology 5.0
Tokio Marine Holdings, Inc. Financials 4.3
Hitachi, Ltd. Industrials 4.2
Renesas Electronics Corp. Information Technology 3.3
FUJIFILM Holdings Corp. Information Technology 3.1
Ajinomoto Co., Inc. Consumer Staples 3.1
Sony Group Corp. Consumer Discretionary 3.0
Suzuki Motor Corp. Consumer Discretionary 3.0
Mitsubishi Electric Corp. Industrials 2.9
TOTAL 37.2

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 31/01/2024)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Industrials 21.6 22.2 -0.6
Information Technology 20.9 14.9 6.0
Consumer Discretionary 19.3 19.4 -0.1
Financials 11.1 12.7 -1.6
Materials 6.6 4.8 1.8
Health Care 5.7 8.1 -2.4
Consumer Staples 5.0 5.6 -0.6
Communication Services 4.7 7.2 -2.5
Real Estate 2.5 3.1 -0.6
Utilities 0.0 1.1 -1.1
Energy 0.0 0.8 -0.8
Cash and Other Assets, Less Liabilities 2.5 0.0 2.5

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) 57.2 61.6 -4.4
Large Cap ($10B-$25B) 22.7 25.3 -2.6
Mid Cap ($3B-$10B) 14.1 13.1 1.0
Small Cap (under $3B) 3.5 0.0 3.5
Cash and Other Assets, Less Liabilities 2.5 0.0 2.5

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 31/12/2023)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 99% Benchmark Coverage: 100%
0.0 1.2 -1.2
Fund Coverage: 99% Benchmark Coverage: 100%
0.0 0.9 -0.9
Name Fund Benchmark Difference
UN Global Compact Violators
Fund Coverage: 100% Benchmark Coverage: 100%
0.0 0.1 -0.1
Board Diversity
Fund Coverage: 100% Benchmark Coverage: 99%
17.7 17.1 0.6

Board Diversity: Represents the weighted average ratio of female 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.
Controversial weapons include companies with involvement in the following: anti-personnel mines; biological and chemical weapons; cluster weapons; depleted uranium; nuclear weapons and white phosphorus. A company is excluded if it is directly involved in the production, selling and/or distribution of (parts of) controversial weapons and this involvement concerns the core weapon system, or components/services of the core weapon system that are tailor-made and essential for the lethal use of the weapon.

Source: Sustainalytics, Factset, MSCI, Matthews Asia.

GHG Intensity

(as of 31/12/2023)

Fund Coverage: 99%; Benchmark Coverage: 99% as of 31/12/2023

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, 2021). Carbon intensity represents the issuer’s total carbon emissions per EUR million of revenue (tCO2e divided by EUR million in revenue).

Source: Sourced from ISS ESG. Where not covered by external data providers, we have tried to source these data points.

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 ESG-Related Investment Policy of Matthews Asia Funds.


  • 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

Shuntaro  Takeuchi photo
Shuntaro Takeuchi

Lead Manager

Donghoon  Han photo
Donghoon Han

Lead Manager


Period ended 31 December 2023

For the year ending 31 December 2023, the Matthews Japan Fund returned 20.15%, while its benchmark, the MSCI Japan Index returned 20.77%. For the fourth quarter of the year, the Fund returned 7.74% versus 8.22% for the benchmark.

Market Environment

Japan equity markets posted healthy total returns in 2023, along with other developed markets, outpacing emerging markets. Japanese stocks’ outperformance was mainly driven by resilient earnings growth amid a tepid global macro economy. Valuation levels also moved up from the low end to the midpoint of the past 10-year historical range, helped by government policy and activist pressure which pushed undervalued companies to increase their payouts and buybacks.

The direction of interest rates and risk premiums in 2023 was a seesaw between hopes for the U.S. Federal Reserve’s pace of rate hike slowing down. The discussion of rates being ‘higher for longer,’ spurred a risk-off move across global markets for the third quarter, as U.S. 10-uear bond yields reached 5% in October for the first time in 2008. Sentiment improved toward the end of the year as investors responded to evidence of softening in global growth and an easing in inflationary pressures. For the full year, the MSCI Japan Value Index outpaced the MSCI Japan Growth Index by 661 basis points (6.61%), reflecting the general rise in interest rates. 
The Japanese yen traded in a range bound for the first three months of the year but in the third quarter, as U.S. 10-year bond yields rose, the currency weakened back to its 27-year low of 150 yen to the U.S. dollar. 


The 2023 investment result in terms of attribution was a clear one. The portfolio’s overweight to small caps relative to the benchmark resulted in the majority of the detraction while positive stock selection in all market cap spectrums offset the allocation effect. From a sector perspective, stock selection in materials and consumer staples were the two largest contributors to relative performance while stock selection in financials and industrials were the biggest detractors.
At the holdings level, Shin-Etsu Chemical and Renesas Electronics were the top two contributors to both the Fund’s total and relative returns. The share price of semiconductor company Renesas Electronics faced some profit taking in the third quarter, but we continue to view positively the company’s ongoing progress in inventory adjustments as it shows the company’s solid execution during downturns. We continue to see Renesas constructively as its valuation level still remains compelling. 

Polyvinyl chloride and semiconductor wafer manufacturer Shin-Etsu Chemical’s main businesses faced a downturn through the housing and semiconductor cycle, but the company once again displayed its capability to maneuver slowdowns, maintaining its high-capacity utilization rate and adhering to long-term agreements with key customers. 
The largest detractor to the portfolio’s relative investment results was Tokyo Electron, a semiconductor production equipment company that we did not own until mid-December of 2023. However, as a portfolio overall, we were able to benefit from overweighting the semiconductor-related industry group. Debt guarantor eGuarantee was the second-largest detractor to investment results. Although the company continues to execute and generate strong earnings growth, COVID-related relief funds that saved many institutions from bankruptcy led to a slower-than-expected rise in bankruptcy numbers in Japan. We have already exited from this position.  

Notable Changes

During the December quarter, we made three major changes to the portfolio. First, with foreign investor flow turning positive for the first time in five years, we shifted our portfolio's average market cap upwards. Second, we reduced multiple positions that worked as a “value play” within the portfolio, especially names where the majority of the returns were from pure re-ratings. Third, as the global purchase manufacturing index (PMI) stayed below 50 for the full 12 months of 2023, we started to look for names whose fundamentals are set to bottom out as we look toward 2024 and beyond. We took advantage of the market correction in October to initiate some cyclical growth names. 
We initiated a position in real estate developer Mitsui Fudosan. We believe the company will continue to produce steady mid-single digit growth from vacancy rates peaking out in central Tokyo. We also look forward to its new management's stance towards achieving optimal return on equity through asset sales. 

We have also re-initiated a position in medical device manufacturer Terumo. After meeting with the management, we have built a conviction that multiple headwinds such as group buying in China and rising raw materials, logistics and manufacturing cost inflation have started to peak out and Terumo has taken numerous steps, from shifting its manufacturing locations to raising prices. We initiated our position when the company’s valuation level was in the lower end of its 10-year range. 

To fund these positions, we exited Amvis, Asahi Intecc, Bandai Namco, Baycurrent Consulting, Denso, Dip, eGuarantee, Integral, Mitsubishi Chemical, Miura, NIDEC, Nitori, Peptidream, Sega Sammy, Softbank Group, Sumitomo Mitsui Financial Group, Taiyo Yuden, TKP, Toho, Tokyo Ohka, TRYT, Unicharm.


After a strong finish to the close of 2023, the MSCI Japan Index is trading at 14.7 x forward 12 months price-to-earnings ratio and 1.42 x price-to-book ratio with a 2.24% dividend yield. Valuations have risen compared to 2022 year-end but still look sensible in an international context. Along with the long-term trend of corporate Japan achieving better through-the-cycle margins, recent activist investor activity is working as a clear catalyst for the corporate sector to further enhance shareholder returns via dividends and share buybacks. 
Over the long term, we continue to believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle. As of year-end 2023, the Japanese equity market outperformed both the MSCI EAFE Index and the MSCI Emerging Markets Index in U.S. dollar terms. In other words, ‘not owning Japan’ is no longer a formula for outperformance for global investors. With the yen at a near quarter-century-low to the dollar, Japanese companies are in good health and domestically, a full year of reopening has resulted in record spending despite tourist numbers still below pre-COVID levels. We continue to believe there is a major perception and positioning gap of the Japanese equity market as an asset class in the global market context. 

Overall, Japan continues to enjoy several tailwinds including a positive earnings cycle driven by moderate inflation, meaningful wage gains and policy driven reforms which are pushing companies to increase their corporate value via capital efficiencies and shareholder payouts. In addition, the recovery in inbound tourism plus the fact that Japan lacks the geopolitical headwinds of China is creating positive foreign inflows. 2023 saw an inflow of 3.2 trillion yen from foreign investors. While this is not small, it is only a fraction of the of the 11.8 trillion yen foreign investor outflow in the previous five-year period (2018-2022).

Our strategy continues to focus on investing in companies that can grow earnings through a relentless effort to achieve positive margin slope (long-term improvement in corporate margin levels). We are strong believers that these companies will be able to generate incremental returns over the long term. In sub industries, we continue to be constructive in areas such as semiconductors, automation, software, healthcare service and technology, as well as global intellectual property (IP) owners.

Rolling 12 Month Returns For the period ended 31/12/2023 - I (Acc)
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Japan Fund (USD)
20.15% -26.87% -1.96% 32.83% 25.54% 30/04/2015
MSCI Japan Index (USD)
20.77% -16.31% 2.04% 14.91% 20.07%
Matthews Japan Fund (GBP)
13.70% -18.12% -0.63% 28.30% 21.61% 30/04/2015
MSCI Japan Index (GBP)
13.96% -5.76% 2.98% 11.36% 15.44%
Matthews Japan Fund (USD Hedged)
35.89% -14.54% 9.63% 25.29% 26.94% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
36.24% -1.62% 13.96% 10.14% 21.81%
Matthews Japan Fund (EUR Hedged)
32.96% -15.79% 8.65% 24.18% 23.10% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
33.32% -4.06% 13.13% 8.27% 18.17%

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