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 22/09/2023)



(as of 22/09/2023)


1 Day NAV Change

(as of 22/09/2023)


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 $104.31 million (31/08/2023)
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 31/08/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
-2.81% 5.54% 15.45% 15.11% 0.64% 2.06% n.a. 5.18% 30/04/2015
MSCI Japan Index (USD)
-2.42% 4.67% 13.84% 15.77% 4.26% 3.49% n.a. 4.48%
Matthews Japan Fund (GBP)
-1.39% 2.84% 9.55% 5.48% 2.32% 2.52% n.a. 7.64% 30/04/2015
MSCI Japan Index (GBP)
-0.92% 2.37% 8.07% 6.31% 6.19% 4.02% n.a. 6.93%
Matthews Japan Fund (USD Hedged)
0.20% 11.69% 31.95% 27.12% 14.03% 9.53% n.a. 11.23% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
0.44% 10.39% 29.66% 27.49% 18.24% 11.41% n.a. 11.83%
Matthews Japan Fund (EUR Hedged)
0.00% 10.93% 29.84% 23.58% 12.30% 7.49% n.a. 9.07% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
0.32% 9.78% 27.88% 24.22% 16.21% 9.08% n.a. 9.43%
As of 30/06/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund (USD)
5.19% 7.05% 15.08% 18.12% 3.40% 1.89% n.a. 5.25% 30/04/2015
MSCI Japan Index (USD)
4.11% 6.45% 13.24% 18.62% 6.09% 3.51% n.a. 4.51%
Matthews Japan Fund (GBP)
2.73% 4.65% 9.43% 13.05% 2.35% 2.65% n.a. 7.79% 30/04/2015
MSCI Japan Index (GBP)
1.50% 3.53% 7.14% 13.31% 5.08% 4.30% n.a. 6.96%
Matthews Japan Fund (USD Hedged)
9.49% 17.73% 29.35% 31.10% 15.88% 9.09% n.a. 11.19% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
7.98% 16.65% 26.83% 31.65% 18.96% 11.17% n.a. 11.78%
Matthews Japan Fund (EUR Hedged)
9.15% 17.04% 27.75% 27.56% 14.19% 7.07% n.a. 9.05% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
7.69% 16.17% 25.44% 28.14% 17.01% 8.80% n.a. 9.36%
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 30/06/2023
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Japan Fund (USD)
18.12% -26.39% 27.15% 10.45% -10.05% 30/04/2015
MSCI Japan Index (USD)
18.62% -19.64% 25.25% 3.51% -3.83%
Matthews Japan Fund (GBP)
13.05% -15.75% 12.55% 14.12% -6.86% 30/04/2015
MSCI Japan Index (GBP)
13.31% -8.59% 12.03% 6.62% -0.24%
Matthews Japan Fund (USD Hedged)
31.10% -9.26% 30.82% 10.85% -10.44% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
31.65% -1.00% 29.16% 5.55% -4.44%
Matthews Japan Fund (EUR Hedged)
27.56% -9.66% 29.23% 9.08% -13.36% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
28.14% -2.35% 28.02% 2.89% -7.50%

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 31/08/2023)
Fund Benchmark
Number of Positions 59 237
Weighted Average Market Cap $38.1 billion $51.6 billion
Active Share 69.4 n.a.
P/E using FY1 estimates 16.2x 14.2x
P/E using FY2 estimates 14.8x 13.7x
Price/Cash Flow 10.7 9.2
Price/Book 1.8 1.4
Return On Equity 13.6 12.1
EPS Growth (3 Yr) 16.3% 12.2%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/08/2023)
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 31/08/2023)
Name Sector % Net Assets
Keyence Corp. Information Technology 3.9
Ajinomoto Co., Inc. Consumer Staples 3.7
Hitachi, Ltd. Industrials 3.2
ITOCHU Corp. Industrials 3.1
Renesas Electronics Corp. Information Technology 3.1
ORIX Corp. Financials 3.0
Shin-Etsu Chemical Co., Ltd. Materials 3.0
Tokio Marine Holdings, Inc. Financials 2.8
Suzuki Motor Corp. Consumer Discretionary 2.8
Sumitomo Mitsui Financial Group, Inc. Financials 2.8
TOTAL 31.4

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 31/08/2023)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 20.8 18.7 2.1
Industrials 20.0 23.5 -3.5
Information Technology 18.0 14.0 4.0
Financials 13.2 11.9 1.3
Consumer Staples 7.3 6.3 1.0
Communication Services 6.9 7.2 -0.3
Materials 6.8 4.7 2.1
Health Care 5.6 8.8 -3.2
Real Estate 0.6 3.0 -2.4
Utilities 0.0 1.2 -1.2
Energy 0.0 0.8 -0.8
Cash and Other Assets, Less Liabilities 0.9 0.0 0.9

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) 38.6 57.7 -19.1
Large Cap ($10B-$25B) 28.4 25.4 3.0
Mid Cap ($3B-$10B) 21.9 16.9 5.0
Small Cap (under $3B) 10.2 0.0 10.2
Cash and Other Assets, Less Liabilities 0.9 0.0 0.9

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.

ESG Characteristics

(as of 30/06/2023)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 97% Benchmark Coverage: 100%
0.0 0.0 0.0
Fund Coverage: 97% Benchmark Coverage: 100%
0.0 0.8 -0.8
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%
14.4 15.7 -1.3

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.

Source: Sustainalytics, Factset, MSCI, Matthews Asia.

GHG Intensity

(as of 30/06/2023)

Fund Coverage: 97%; Benchmark Coverage: 100% as of 30/06/2023

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 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

Donghoon  Han photo
Donghoon Han



Period ended 30 June 2023

For the first half of 2023, the Matthews Japan Fund returned 15.08%, while its benchmark, the MSCI Japan Index, returned 13.24% over the same period. For the quarter ending 30 June 2023, the Fund returned 7.05%, while the benchmark returned 6.45%.

Market Environment:

Japan equity markets for the first half of 2023 posted double digit returns, along with other developed markets, outpacing emerging markets. Japanese stocks continued their march higher during the second quarter as government policy and activist pressure pushed undervalued companies to increase their payout and buy-back ratios. Hopes for China reopening waned quickly but the U.S. Federal Reserve’s pace of rate hike slowing down amid inflation rates starting to peak out spurred a general risk-on environment. The Japanese yen traded in a range bound for the first three months of the year but in second quarter, as US 10 year bond yield rose towards 4%, and the Japanese yen weakened towards 145 yen.

Japan enjoys several tailwinds for the first time in years 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 into Japan.

Performance Contributors and Detractors:

In the first half, strong stock selections were able to overcome the detraction from allocation effect versus the benchmark index. From a sector perspective, our stock selection in health care and consumer staples were the two largest contributors to relative performance year to date. On the other hand, the portfolio’s underweight and stock selection in industrials was the biggest detractor.

At the holdings level, semiconductor company Renesas Electronics, was the largest contributor to investment results. Shares reacted positively after earnings results in February, with progress being made in inventory adjustments showed the company’s solid execution during downturns. We continue to see Renesas constructively as its valuation level still remains compelling even after the strong performance year to date, and potential for the company to improve shareholder returns. Electronic materials and chemical product company Shin-Etsu Chemical was another top contributor. The company continued to impress the market with solid execution capability during economic downturns and inventory adjustment period in both semiconductor wafers and polyvinyl chllloride (PVC) demand. Over the long term, we remain bullish on the semiconductor market as well as the wafer market where Shin-Etsu is a solid global leader with pricing power.

On the other hand, debt guarantor eGuarantee was the largest detractor year to date. The company’s shares weakened as small-cap growth companies faced unfavorable style movements in markets, but eGuarantee is poised to benefit from rise in bankruptcies as COVID-related relief funds have started to expire. eGuarantee is in the business of guaranteeing various types of credit that arise between companies doing business with each other. The credit guarantee business is a niche market, but it is a growing market in which eGuarantee is the leader. Furniture retailer Nitori was also a major detractor to investment results. The company has high exposure to currency rates, as they manufacture furnitures overseas while the majority of their retail operations are in Japan. Yen weakness resumed especially in the second quarter, which pushed down the company’s own efforts to raise price and introduce new products that can adapt to current currency environment.

Notable Portfolio Changes:

During the second quarter, winitiated a position in credit card company Credit Saison. The company, in our view, could offer double digit profit growth coupled with increased shareholder return potential. While total card membership number are not growing, revolving loan total has turned positive year over year (YoY) post COVID and cashing loan has started to bottom out. Credit Saison’s India subsidiary (Kisetsu Saison Finance India) is growing above expectations, and starting to contribute to earnings.

We have also re-initiated Toyota Motor after a year of hiatus. The stock has underperformed the overall market over the past year due to production constraints stemming from semiconductor shortage, but the shortage has been largely resolved while the company has been quietly increasing its market share in Europe and Chinese markets with its hybrid vehicles.

To fund these positions, weexited Daikin Industries, IHI, Lasertec, Mitsubishi UFJ Financial Group, Nippon Telegraph & Telephone, and SMS Company.


While the market seems ready for the Fed to pivot 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 sudden reversal of growth underperformance in Japan anytime soon, although we also think that we have seen the worst in terms of style shift. We continue to prefer taking a more balanced approach towards multiple stages of growth and valuation levels. For the year of 2023, companies’ earnings growth and cash flow-generation ability will be ever more important as financial estimates for Japanese corporates have started to be revised down.

Over the 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 continue to believe this is the time for investors to add a long-term exposure to the market.


The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries. With 1,512 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

Rolling 12 Month Returns For the period ended 30/06/2023 - I (Acc)
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Japan Fund (USD)
18.12% -26.39% 27.15% 10.45% -10.05% 30/04/2015
MSCI Japan Index (USD)
18.62% -19.64% 25.25% 3.51% -3.83%
Matthews Japan Fund (GBP)
13.05% -15.75% 12.55% 14.12% -6.86% 30/04/2015
MSCI Japan Index (GBP)
13.31% -8.59% 12.03% 6.62% -0.24%
Matthews Japan Fund (USD Hedged)
31.10% -9.26% 30.82% 10.85% -10.44% 03/04/2017
MSCI Japan Index 100% Hedged to USD (USD Hedged)
31.65% -1.00% 29.16% 5.55% -4.44%
Matthews Japan Fund (EUR Hedged)
27.56% -9.66% 29.23% 9.08% -13.36% 03/04/2017
MSCI Japan Index 100% Hedged to EUR (EUR Hedged)
28.14% -2.35% 28.02% 2.89% -7.50%

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