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 25/11/2022)



(as of 25/11/2022)


1 Day NAV Change

(as of 25/11/2022)


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 $145.68 million (31/10/2022)
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 31/10/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
2.83% -10.58% -31.63% -32.68% -2.22% -1.50% n.a. 2.84% 30/04/2015
MSCI Japan Index (USD)
2.97% -9.91% -23.92% -24.37% -2.88% -0.58% n.a. 1.89%
Matthews Japan Fund (GBP)
-1.32% -5.56% -19.91% -19.32% 1.74% 1.27% n.a. 6.89% 30/04/2015
MSCI Japan Index (GBP)
-0.17% -4.78% -10.50% -9.96% 0.97% 2.30% n.a. 5.89%
Matthews Japan Fund (USD Hedged)
6.03% 0.64% -10.72% -10.97% 9.04% 5.07% n.a. 8.37% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
5.92% 1.16% -0.09% 0.36% 9.15% 6.44% n.a. 8.84%
Matthews Japan Fund (EUR Hedged)
5.85% -0.28% -11.53% -11.97% 7.87% 3.12% n.a. 6.38% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
5.66% 0.27% -2.02% -1.88% 7.40% 4.14% n.a. 6.53%
As of 30/09/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
-9.37% -6.69% -33.52% -34.96% -1.67% -1.27% n.a. 2.49% 30/04/2015
MSCI Japan Index (USD)
-10.22% -7.52% -26.11% -29.02% -2.29% -0.26% n.a. 1.51%
Matthews Japan Fund (GBP)
-4.57% 2.39% -18.84% -20.77% 1.97% 2.57% n.a. 7.17% 30/04/2015
MSCI Japan Index (GBP)
-6.41% 0.61% -10.34% -14.26% 0.98% 3.47% n.a. 5.98%
Matthews Japan Fund (USD Hedged)
-5.08% -0.14% -15.79% -15.21% 8.70% 4.86% n.a. 7.36% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-5.72% -0.47% -5.67% -6.36% 8.87% 6.40% n.a. 7.85%
Matthews Japan Fund (EUR Hedged)
-5.52% -0.89% -16.42% -16.21% 7.49% 2.94% n.a. 5.39% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-6.11% -1.26% -7.26% -8.28% 7.10% 4.13% n.a. 5.57%
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 30/09/2022
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Japan Fund (USD)
-34.96% 16.99% 24.96% -8.82% 8.21% 30/04/2015
MSCI Japan Index (USD)
-29.02% 22.46% 7.31% -4.32% 10.57%
Matthews Japan Fund (GBP)
-20.77% 11.53% 19.99% -3.55% 11.01% 30/04/2015
MSCI Japan Index (GBP)
-14.26% 17.42% 2.29% 1.25% 13.76%
Matthews Japan Fund (USD Hedged)
-15.21% 24.07% 22.09% -11.13% 11.07% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-6.36% 29.68% 6.26% -7.00% 13.64%
Matthews Japan Fund (EUR Hedged)
-16.21% 22.74% 20.76% -14.15% 8.41% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-8.28% 28.51% 4.24% -9.99% 10.73%

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 31/10/2022)
Fund Benchmark
Number of Positions 53 237
Weighted Average Market Cap $31.1 billion $41.2 billion
Active Share 70.0 n.a.
P/E using FY1 estimates 17.1x 12.0x
P/E using FY2 estimates 16.7x 11.8x
Price/Cash Flow 12.1 8.2
Price/Book 2.1 1.2
Return On Equity 13.3 12.4
EPS Growth (3 Yr) 10.9% 10.7%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/10/2022)
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 31/10/2022)
Name Sector % Net Assets
Olympus Corp. Health Care 4.1
Daiichi Sankyo Co., Ltd. Health Care 3.8
Tokio Marine Holdings, Inc. Financials 3.3
Hoya Corp. Health Care 3.3
Keyence Corp. Information Technology 3.3
Ajinomoto Co., Inc. Consumer Staples 3.1
Nippon Telegraph & Telephone Corp. Communication Services 3.1
Shin-Etsu Chemical Co., Ltd. Materials 3.0
Hitachi, Ltd. Industrials 2.9
Terumo Corp. Health Care 2.7
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 31/10/2022)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Industrials 18.8 22.0 -3.2
Health Care 16.2 10.5 5.7
Information Technology 12.3 13.6 -1.3
Consumer Discretionary 12.0 18.5 -6.5
Communication Services 11.7 8.9 2.8
Consumer Staples 8.9 6.5 2.4
Financials 7.5 10.3 -2.8
Materials 6.0 4.3 1.7
Real Estate 0.7 3.5 -2.8
Utilities 0.0 1.0 -1.0
Energy 0.0 0.9 -0.9
Cash and Other Assets, Less Liabilities 5.9 0.0 5.9

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) 44.5 51.7 -7.2
Large Cap ($10B-$25B) 21.3 27.5 -6.2
Mid Cap ($3B-$10B) 13.6 20.8 -7.2
Small Cap (under $3B) 14.7 0.0 14.7
Cash and Other Assets, Less Liabilities 5.9 0.0 5.9

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 ©2022 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 September 2022

For the quarter ending 30 September 2022, the Matthews Japan Fund returned -6.69%, while its benchmark, the MSCI Japan Index, returned -7.52%.

Market Environment:

Japan equity markets year to date offer an extremely different picture depending on which currencies investments are based on. The yen hit 135 to the U.S. dollar toward the end of the second quarter in June, a level last seen in early 2002. This past quarter has seen further weakness. After Federal Reserve Chair Jerome Powell’s hawkish speech on monetary policy and price stability in late August, the yen slid to 145 to the dollar, the weakest since 1998.

Multiple rate hikes by the Fed in tandem with the accommodative stance of the Bank of Japan has resulted in the widening of the U.S.-Japan bond-yield spread. Additional pressure on the yen has come from ongoing high energy prices. Japan's energy self-sufficiency ratio ranks among the lowest of Organisation for Economic Co-operation and Development (OECD) countries and the country’s current electricity generation is heavily dependent on U.S.-dollar denominated imports of natural resources. In simple terms, the yen’s slide has meant that in local currency terms, Japan equities have outperformed peers while in U.S dollar terms they are trading in line.

The other trend to have impacted the Japanese equity markets has been the continued significant spread between the performance of value stocks and growth stocks. While the spread narrowed somewhat in the third quarter, the year-to-date performance gap stands at 1,960 basis points (19.6%), one of the largest in the world.

Performance Contributors and Detractors:

From a market capitalization perspective, the biggest detractor to relative performance in the third quarter was the Fund’s stock selection in mid-cap stocks. The biggest contributor was the Fund’s underweight and stock selection in mega cap, which like large caps tend to be in the export sector and have exposure to global manufacturing cycles which are currently experiencing a slowdown. From a sector perspective, stock selections in the cyclical areas of industrials and materials were among the largest detractors. Our stock selections in consumer discretionary were also a drag on the portfolio mitigated by our underweight position. On the other hand, our overweight and stock selection in consumer staples and health care were the largest contributors to relative performance.

Turning to individual securities, entertainment conglomerate Sony Group was the largest detractor. While its first quarter earnings reported in August surpassed consensus estimates, its mainstay PlayStation game business was weak and led to a downward revision of fiscal-year guidance for the segment. While we remain constructive on Sony we believe challenges in the gaming business will make it difficult for the share price to perform in the near term. JSR, an electronic material manufacturer, was also a big detractor. It announced a downward revision to its earnings guidance as a result of slower than expected ramp-up of its highly anticipated health care business, as well as a weaker topline in display materials. Our conversation with management suggests issues in the health care businesses are transitory and display business revenue may bottom out next quarter. JSR still trades below its intrinsic value and we believe that a re-rating could accelerate as JSR’s health-care profit contribution increases in the later part of this fiscal year.

Conversely, seasoning producer and biopharmaceutical services company Ajinomoto was the largest contributor during the quarter. The company reported robust results in the June quarter, driven by price increases which negated the impact of higher raw material costs. We believe Ajinomoto is in the middle of a turnaround story, moving away from commodity businesses and allocating incremental capital into higher return segments, such as pharmaceutical services and electronic materials. Pharma company Daiichi Sankyo continued to be a top contributor after achieving a positive outcome in the DESTINY-Breast04 (DB04) trial for anticancer agent Enhertu that was announced in June. A favorable court ruling in a dispute with a competitor in August was also major positive news.

Notable Portfolio Changes:

During the quarter we continued to balance our portfolio to brace for the ongoing slowdown in the global economy. We increased exposure to defensive sectors such as consumer staples while taking down our portfolio weighting in cyclical growth areas. The bright spot is in the domestic sector where the Japanese government has finally started to move toward reopening of the economy. In this context, we re-initiated a position in Kyoritsu Maintenance. The company's hotel operation adapted during COVID and improved its revenue per available room (RevPar) metric without relying heavily on a recovery in inbound tourist demand. Going forward, we believe the company has a potential to achieve a higher earnings level than pre-COVID levels.

We also initiated a position in JGC, a plant engineering company. We view its order outlook as remaining strong over the medium term given that the changes in natural gas procurement in Europe and other parts of the world will support plant demand for the company. Liquefied Natural Gas (LNG) has been an area starved of capital for a while which has resulted in the current market tightness. It has become more relevant as a transition fuel and we believe JGC is in a good position to capture this opportunity. In order to make positions for new names we exited CyberAgent, Dai-ichi Life, Food & Life Companies, TDK and Toyota Industries.


Extremely loose monetary policy from all major central banks has clearly reversed and the Fed is ever more hawkish to contain inflation. As we are still witnessing something of a mean reversion of growth underperformance in Japan and are taking a more balanced approach towards multiple stages of growth and valuation levels, we believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle. In addition, after more than two and a half years of various levels of border closures due to COVID, Japan will fully reopen for individual travel in October and in our view this will position the domestic economy for a boost.

For the past decade, Japan equities as an asset class have been one of the best performing international markets in U.S. dollar terms, despite lack of GDP growth, equity multiple expansion, and constant depreciation of the currency. With the yen at a 24-year low to the dollar, the earnings capabilities of Japanese companies in good shape and the country once again open for tourism, we believe a unique window has opened for investors looking to add long-term exposure to the market.


Rolling 12 Month Returns For the period ended 30/09/2022 - I (Acc)
Name 2022 2021 2020 2019 2018 Inception Date
Matthews Japan Fund (USD)
-34.96% 16.99% 24.96% -8.82% 8.21% 30/04/2015
MSCI Japan Index (USD)
-29.02% 22.46% 7.31% -4.32% 10.57%
Matthews Japan Fund (GBP)
-20.77% 11.53% 19.99% -3.55% 11.01% 30/04/2015
MSCI Japan Index (GBP)
-14.26% 17.42% 2.29% 1.25% 13.76%
Matthews Japan Fund (USD Hedged)
-15.21% 24.07% 22.09% -11.13% 11.07% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
-6.36% 29.68% 6.26% -7.00% 13.64%
Matthews Japan Fund (EUR Hedged)
-16.21% 22.74% 20.76% -14.15% 8.41% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
-8.28% 28.51% 4.24% -9.99% 10.73%

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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