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Matthews Japan Fund
MJFOX

Snapshot
  • 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

12/31/1998

Inception Date

18.89%

YTD Return

(as of 07/17/2024)

$20.90

NAV

(as of 07/17/2024)

-0.16

1 Day NAV Change

(as of 07/17/2024)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Japan Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Japan. The Fund seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information; number of employees; size and stability of cash flow; management’s depth, adaptability and integrity; product lines; marketing strategies; corporate governance; and financial health.

Risks

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, investments in a single-country fund, which is considered a non-diversified 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 12/31/1998
Fund Assets $667.48 million (06/30/2024)
Currency USD
Ticker MJFOX
Cusip 577-130-800
Portfolio Turnover 100.6%
Benchmark MSCI Japan Index
Geographic Focus Japan
Fees & Expenses
Gross Expense Ratio 1.09%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 06/30/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund - MJFOX
12/31/1998
MJFOX
0.66% -2.17% 12.80% 17.34% -0.04% 6.27% 6.52% 5.93%
MSCI Japan Index
-0.70% -4.24% 6.45% 13.53% 2.67% 7.01% 5.91% 4.07%
As of 06/30/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund - MJFOX
12/31/1998
MJFOX
0.66% -2.17% 12.80% 17.34% -0.04% 6.27% 6.52% 5.93%
MSCI Japan Index
-0.70% -4.24% 6.45% 13.53% 2.67% 7.01% 5.91% 4.07%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Matthews Japan Fund - MJFOX
MJFOX
17.99% -27.85% -1.92% 29.82% 26.08% -20.18% 33.14% 0.40% 20.83% -2.60%
MSCI Japan Index
20.77% -16.31% 2.04% 14.91% 20.07% -12.58% 24.39% 2.73% 9.90% -3.72%

Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.

Assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. Performance differences between the Institutional class and the Investor class may arise due to differences in fees charged to each class.

Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.

Growth of a Hypothetical $10,000 Investment Since Inception

(as of 06/30/2024)

Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.

The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of fund shares.

Ratings

  • OVERALL
  • out of 36 funds
  • 3 YEAR
  • out of 36 funds
  • 5 YEAR
  • out of 32 funds
  • 10 YEAR
  • out of 23 funds
  • 1 YEAR
  • 2nd
  • 10 out of 2 funds
  • 3 YEAR
  • 3rd
  • 22 out of 2 funds
  • 5 YEAR
  • 2nd
  • 15 out of 2 funds
  • 10 YEAR
  • 2nd
  • 9 out of 2 funds
  • SINCE INCEPTION
  • 2nd
  • 3 out of 7 funds

Ratings agency calculation methodology

Portfolio Managers

Shuntaro  Takeuchi photo
Shuntaro Takeuchi

Lead Manager

Donghoon  Han photo
Donghoon Han

Lead Manager

Portfolio Characteristics

(as of 06/30/2024)
Fund Benchmark
Number of Positions 45 203
Weighted Average Market Cap $51.3 billion $65.0 billion
Active Share 65.5 n.a.
P/E using FY1 estimates 17.2x 15.5x
P/E using FY2 estimates 15.5x 14.6x
Price/Cash Flow 11.5 10.1
Price/Book 1.9 1.5
Return On Equity 12.7 11.8
EPS Growth (3 Yr) 13.1% 10.9%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 06/30/2024)
-2.24%
Alpha
1.11
Beta
108.89%
Upside Capture
115.42%
Downside Capture
-0.17
Sharpe Ratio
-0.40
Information Ratio
6.80%
Tracking Error
87.87

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 06/30/2024)
Name Sector % Net Assets
Keyence Corp. Information Technology 4.8
Tokio Marine Holdings, Inc. Financials 4.6
Hitachi, Ltd. Industrials 4.5
Shin-Etsu Chemical Co., Ltd. Materials 4.3
Mitsubishi UFJ Financial Group, Inc. Financials 4.2
Tokyo Electron, Ltd. Information Technology 4.2
ITOCHU Corp. Industrials 4.2
ORIX Corp. Financials 4.1
Recruit Holdings Co., Ltd. Industrials 3.6
Renesas Electronics Corp. Information Technology 3.2
TOTAL 41.7

Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.

Source: BNY Mellon Investment Servicing (US) Inc.

Portfolio Breakdown (%)

(as of 06/30/2024)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 20.5 18.2 2.3
Information Technology 20.3 15.4 4.9
Industrials 18.4 23.0 -4.6
Financials 14.8 15.0 -0.2
Materials 8.4 4.2 4.2
Health Care 6.8 7.7 -0.9
Consumer Staples 4.6 5.2 -0.6
Real Estate 2.6 2.5 0.1
Communication Services 2.3 6.9 -4.6
Utilities 0.0 1.2 -1.2
Energy 0.0 0.9 -0.9
Cash and Other Assets, Less Liabilities 1.4 0.0 1.4

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 60.5 66.7 -6.2
Large Cap ($10B-$25B) 19.8 21.2 -1.4
Mid Cap ($3B-$10B) 9.5 12.0 -2.5
Small Cap (under $3B) 8.8 0.0 8.8
Cash and Other Assets, Less Liabilities 1.4 0.0 1.4

Source: FactSet Research Systems.

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.

Distributions

Record Date Ex, Pay and
Reinvest Date
Ordinary
Income
Short Term
Capital Gains
Long Term
Capital Gains
Total Distributions
Per Share
% of NAV Nondividend Distribution (Return of Capital)
12/13/2022 12/14/2022 $0.00000 $0.00000 $1.07119 $1.07119 6.5% N.A.
12/14/2021 12/15/2021 $0.23596 $0.32236 $2.18705 $2.74537 11.1% N.A.
12/15/2020 12/16/2020 $0.13240 $0.00000 $2.43277 $2.56517 10.5% N.A.
12/16/2019 12/17/2019 $0.11960 $0.00000 $1.73617 $1.85577 8.6% N.A.
12/11/2018 12/12/2018 $0.05981 $0.05088 $0.65715 $0.76784 N.A. N.A.

 

There is no guarantee that the Fund will pay or continue to pay distributions. 

Past performance is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost.

Commentary

Period ended June 30, 2024

Market Environment

  • Japanese equities in local currency terms have surpassed most developed markets this year; however, at the end of the quarter they ended lower in U.S. dollar terms as the Japanese yen resumed its weaker trajectory. Higher-for-longer U.S. interest rate rhetoric has challenged the yen and while a cheap currency is good for Japanese exporters, it’s a disincentive to international investment inflows and can create spending challenges for domestic consumers.
  • Still at the macro level, the upward bias toward inflation and wage growth is putting the government in a difficult position. Investors are speculating that the central bank will raise policy rates later this year even though economic growth is weak.
  • In the market, performance was driven by large-cap stocks as they responded to regulator demands to improve capital efficiencies by selling down cross holdings and buying back shares. Growth-oriented companies struggled while small caps underperformed. Sector-wise, financials, energy and utilities were solid performers and companies in the technology space benefited from the expansion of the global artificial intelligence (AI) supply chain.

Contributors and Detractors

  • For the quarter ended June 30, 2024, the Matthews Japan Fund returned -2.17%, (Investor Class) and -2.12% (Institutional Class) while its benchmark, the MSCI Japan Index, returned -4.24% over the same period.
  • On a sector basis, the top three contributors to relative performance were industrials, consumer discretionary and information technology (IT) due to stock selection. The top three detractors were real estate and consumer staples due to stock selection and energy due to zero allocation.
  • The largest contributors to absolute performance during the quarter included Hitachi, a multinational electronics conglomerate, Tokio Marine Holdings, an insurance company and Recruit Holdings, a human resources (HR) company. The top three detractors to performance included Tokyo Electron, an electronics company, Fast Retailing, a clothing manufacturer and retailer and Shin-Etsu Chemical, a chemicals company.

Outlook

  • We remain constructive on Japanese equities for the second half of the year for three reasons: resilient earnings growth supported by exports and AI themes; capital efficiency gains; and positioning—global investors remain underweight to Japan which leaves valuations at a relatively reasonable level, in our view.  
  • The yen’s ongoing weakness offers headwinds and tailwinds for Japan’s economy and markets. The potential onset of a Fed rate-cutting cycle and the likely weakening of the dollar that it will likely bring, offers the prospect of a more stable and stronger period for Japan’s currency market.

 

View the Fund’s Top 10 holdings as of June 30, 2024. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MJFOX as of 06/30/2024
1YR 3YR 5YR 10YR Since Inception Inception Date
17.34% -0.04% 6.27% 6.52% 5.93% 12/31/1998

All performance quoted is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund's fees and expenses had not been waived. For the Fund's most recent month-end performance visit matthewsasia.com

Fees & Expenses
Gross Expense Ratio 1.09%

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

 

Visit our Glossary of Terms page for definitions and additional information.

Index Definitions

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. Neither the funds nor the Investment Advisor accept any liability for losses either direct or consequential caused by the use of this information.

The views and opinions in the commentary were as of the report date, subject to change and may not reflect 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.