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 10/08/2022)



(as of 10/08/2022)


1 Day NAV Change

(as of 10/08/2022)


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 $167.26 million (31/07/2022)
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 31/07/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
7.31% -2.54% -23.55% -20.00% 3.30% 2.51% n.a. 4.54% 30/04/2015
MSCI Japan Index (USD)
5.70% -1.01% -15.55% -13.97% 3.22% 2.85% n.a. 3.44%
Matthews Japan Fund (GBP)
6.99% 0.63% -15.20% -8.15% 3.34% 4.06% n.a. 7.99% 30/04/2015
MSCI Japan Index (GBP)
5.49% 2.13% -6.00% -1.71% 3.43% 4.51% n.a. 6.82%
Matthews Japan Fund (USD Hedged)
5.21% 0.13% -11.29% -2.57% 10.83% 7.40% n.a. 8.66% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
4.21% 2.69% -1.23% 5.66% 11.61% 8.25% n.a. 9.04%
Matthews Japan Fund (EUR Hedged)
5.20% 0.93% -11.28% -2.95% 9.72% 5.51% n.a. 6.75% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
4.04% 2.18% -2.28% 4.13% 9.87% 6.02% n.a. 6.79%
As of 30/06/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
-11.31% -16.98% -28.75% -26.39% 1.11% 1.58% n.a. 3.57% 30/04/2015
MSCI Japan Index (USD)
-7.87% -14.60% -20.10% -19.64% 1.38% 2.13% n.a. 2.68%
Matthews Japan Fund (GBP)
-7.85% -10.08% -20.74% -15.75% 2.67% 2.95% n.a. 7.07% 30/04/2015
MSCI Japan Index (GBP)
-4.39% -7.41% -10.89% -8.59% 2.97% 3.51% n.a. 6.11%
Matthews Japan Fund (USD Hedged)
-5.74% -6.86% -15.68% -9.26% 9.58% 6.59% n.a. 7.75% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-2.46% -3.75% -5.22% -1.00% 10.51% 7.46% n.a. 8.34%
Matthews Japan Fund (EUR Hedged)
-5.94% -6.33% -15.66% -9.66% 8.39% 4.68% n.a. 5.83% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-2.66% -4.37% -6.08% -2.35% 8.75% 5.25% n.a. 6.10%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016
Matthews Japan Fund (USD)
-1.96% 32.83% 25.54% -20.58% 33.40% 0.19%
MSCI Japan Index (USD)
2.04% 14.91% 20.07% -12.58% 24.39% 2.73%
Matthews Japan Fund (GBP)
-0.63% 28.30% 21.61% -16.16% 21.57% 20.43%
MSCI Japan Index (GBP)
2.98% 11.36% 15.44% -7.14% 13.62% 22.53%
Matthews Japan Fund (USD Hedged)
9.63% 25.29% 26.94% -20.85% n.a. n.a.
MSCI Japan Index 100% Hedged to USD (USD Hedged)
13.96% 10.14% 21.81% -13.31% n.a. n.a.
Matthews Japan Fund (EUR Hedged)
8.65% 24.18% 23.10% -23.30% n.a. n.a.
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
13.13% 8.27% 18.17% -15.92% n.a. n.a.
For the period ended 30/06/2022
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Japan Fund (USD)
-26.39% 27.15% 10.45% -10.05% 16.32% 30/04/2015
MSCI Japan Index (USD)
-19.64% 25.25% 3.51% -3.83% 10.88%
Matthews Japan Fund (GBP)
-15.75% 12.55% 14.12% -6.86% 14.74% 30/04/2015
MSCI Japan Index (GBP)
-8.59% 12.03% 6.62% -0.24% 9.09%
Matthews Japan Fund (USD Hedged)
-9.26% 30.82% 10.85% -10.44% 16.74% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-1.00% 29.16% 5.55% -4.44% 11.14%
Matthews Japan Fund (EUR Hedged)
-9.66% 29.23% 9.08% -13.36% 13.91% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-2.35% 28.02% 2.89% -7.50% 8.55%

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 31/07/2022)
Fund Benchmark
Number of Positions 51 238
Weighted Average Market Cap $39.4 billion $46.8 billion
Active Share 69.0 n.a.
P/E using FY1 estimates 16.6x 12.4x
P/E using FY2 estimates 15.2x 12.0x
Price/Cash Flow 10.2 8.3
Price/Book 1.9 1.3
Return On Equity 13.5 12.7
EPS Growth (3 Yr) 16.8% 10.1%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 30/06/2022)
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 31/07/2022)
Name Sector % Net Assets
Sony Group Corp. Consumer Discretionary 5.0
Olympus Corp. Health Care 3.9
Tokio Marine Holdings, Inc. Financials 3.7
ORIX Corp. Financials 3.6
Daiichi Sankyo Co., Ltd. Health Care 3.4
Shin-Etsu Chemical Co., Ltd. Materials 3.2
Keyence Corp. Information Technology 3.0
Toyota Motor Corp. Consumer Discretionary 2.9
JSR Corp. Materials 2.8
Hitachi, Ltd. Industrials 2.8
TOTAL 34.3

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 31/07/2022)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Industrials 22.5 22.3 0.2
Consumer Discretionary 16.7 18.8 -2.1
Health Care 11.6 9.8 1.8
Information Technology 10.4 13.6 -3.2
Communication Services 10.0 8.6 1.4
Financials 9.6 10.3 -0.7
Consumer Staples 8.3 6.5 1.8
Materials 8.3 4.6 3.7
Real Estate 0.0 3.6 -3.6
Utilities 0.0 1.1 -1.1
Energy 0.0 0.9 -0.9
Cash and Other Assets, Less Liabilities 2.7 0.0 2.7

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) 48.9 54.5 -5.6
Large Cap ($10B-$25B) 17.6 25.8 -8.2
Mid Cap ($3B-$10B) 18.1 19.6 -1.5
Small Cap (under $3B) 12.7 0.0 12.7
Cash and Other Assets, Less Liabilities 2.7 0.0 2.7

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 28/07/2022)

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 2022

For the first half of 2022, the Matthews Japan Fund returned -28.75%, while its benchmark, the MSCI Japan Index, returned -20.10% over the same period. For the quarter ending June 30, 2022, the Fund returned -16.98%, while the benchmark returned -14.60%.

Market Environment:

Japanese equity markets for the first half of 2022 were dominated by two of the largest moves in decades. Japan’s currency hit 135 yen to the U.S. dollar toward the end of the second quarter, a level last seen in early 2002, and the biggest move between the currencies since the early nineties. Multiple rate hikes by the U.S. Federal Reserve and the accommodative stance of the Bank of Japan is resulting in a widening of the U.S.-Japan bond yield spread. Ongoing high energy prices are also adding pressure on the yen as Japan’s energy self-sufficiency ratio remains one of the lowest among Organisation for Economic Co-operation and Development (OECD) countries. As a result of the weakening yen, Japanese equity markets traded in-line with global developed market peers in U.S. dollar terms despite outperforming in local currency terms.

Secondly, the velocity of the widening of the spread between the performance of value stocks and growth stocks was the fastest in two decades. In the first quarter the spread was 1,556 basis points (15.56%), and in the second quarter it widened by another 730 basis points (7.30%). While this performance gap between value and growth can be seen across the world, it is especially large in Japan. In the first quarter it was more about rising rates resulting in equity multiple-compression of growth names while the second quarter was dominated by fears that multiple rate hikes to contain inflation will result in the world economy falling into a recession.

Performance Contributors and Detractors:

The first six months of the year were an amplified version of first three months of 2021 as our focus on high-quality growth continued to endure a surge in U.S. 10-year bond yields. From a sector perspective, stock selections in the key areas of information technology and industrials were the largest detractors to the relative performance of the portfolio in the first half. Industrials was notably impacted due to its inclusion of commodity price-sensitive trading companies and cyclical-transport enterprises—businesses that have been challenged by surging fuel costs and supply-chain disruption. On the other hand, our overweight and stock selection in consumer staples was the largest contributor to relative performance in the first six months.

From a market cap point of view, our overweight in small cap stocks—those under $3 billion—was also a detractor to performance in the first half. Our underweight and stock selection in mega cap, and overweight and stock selection in mid-cap stocks were also large detractors.

Turning to individual securities, Shin-Etsu Chemical and Tokyo Electron were among the biggest detractors in the first six months. Shin-Etsu Chemical is a top global provider of electronic materials (Silicon Wafers) and PVC (Polyvinyl Chloride) but its trading multiple has compressed sharply amid signs of a slowdown in U.S. housing starts. Tokyo Electron, the largest semiconductor production equipment provider in Japan, has been impacted over concerns over declining demand in consumer electronics and increasing semiconductor inventory.

On the positive side, pharmaceutical company Daiichi Sankyo was a top contributor, after posting a positive outcome of the DESTINY-Breast04 (DB04) trial for anticancer agent Enhertu, as announced by the American Society of Clinical Oncology (ASCO) in June. P&C insurance company Tokio Marine Holdings was also a top contributor in the period. March 2022 full-year results and March 2023 guidance delivered on our investment thesis. We view the stock as offering a mid-teens dividend compound annual growth rate (CAGR) coupled with earnings-per-share (EPS) growth driven by both earnings and buybacks.

Notable Portfolio Changes:

One significant adjustment within our portfolio is the increase in defensive sectors such as consumer staples. While we still see economic growth recovery as the world reopens from the pandemic, ongoing uncertainty over the war in Ukraine, coupled with inflation risks and a rising interest-rate environment, warrant a more balanced approach towards growth in our view. We have also taken down our portfolio weighting in cyclical growth areas as the Global Manufacturing PMI is starting to peak out and rate hikes to manage inflation pose risks for a recession.

In the second quarter, we re-initiated a position in Tokio Marine Holdings. We have always viewed the company as a prudent capital allocator, with its lucrative domestic P&C business among the three top players that control 90% of the car insurance market. The company is also expanding its footprint to overseas specialty M&A insurance.

We initiated a position in Mazda Motor as our research suggests that 2022 is a key launch year for the firm’s new generation products and the company is at a turning point in profitability.

We also added Toho, a producer and distributor of motion pictures in Japan, as we remain optimistic about earnings recovery of its movie theater division and in the longer term, we highly rate Toho’s untapped potential in monetizing its key IP assets.

In order to make positions for new names we exited AGC, Kadokawa, Koito Manufacturing, Morinaga Milk Industry, NTT Data, Persol Holdings, Raksul and Sumitomo Bakelite.


The first half of 2022 turned out to be a much worse external environment for high-quality growth strategies even compared to first three months of 2021. The velocity of the widening of growth-value spreads has made it challenging to adapt our strategy quickly. While extremely loose monetary policy from all major central banks has come to an end and the Federal Reserve has officially started to tighten, the long-value/short-growth trade has now fully unwound back to pre-pandemic levels and some growth names valuations are well below pre-pandemic levels. That said, full-year earnings results in May showed Japanese growth stocks continued to improve their margins and strengthen cashflow generation abilities.

So while we are taking a more balanced approach towards stages of growth and valuation levels we believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle. This has been helped by productivity improvements, better corporate governance, innovation and a higher focus on capital efficiency.

Japan has yet to open up its borders like other developed countries have as they emerged from the pandemic but once it does that will provide a tailwind for the economy. As the Federal Reserve continues to tighten and tries to engineer a soft landing for the world’s biggest economy there will be challenging times ahead. But we believe Japan’s own loose domestic monetary environment, together with the strong fundamentals and profitability of its corporates, will provide healthy investment opportunities.


Rolling 12 Month Returns For the period ended 30/06/2022 - I (Acc)
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Japan Fund (USD)
-26.39% 27.15% 10.45% -10.05% 16.32% 30/04/2015
MSCI Japan Index (USD)
-19.64% 25.25% 3.51% -3.83% 10.88%
Matthews Japan Fund (GBP)
-15.75% 12.55% 14.12% -6.86% 14.74% 30/04/2015
MSCI Japan Index (GBP)
-8.59% 12.03% 6.62% -0.24% 9.09%
Matthews Japan Fund (USD Hedged)
-9.26% 30.82% 10.85% -10.44% 16.74% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-1.00% 29.16% 5.55% -4.44% 11.14%
Matthews Japan Fund (EUR Hedged)
-9.66% 29.23% 9.08% -13.36% 13.91% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-2.35% 28.02% 2.89% -7.50% 8.55%

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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