TOP

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

1.66%

YTD Return

(as of 01/15/2021)

$25.69

Price

(as of 01/15/2021)

$1.65 billion

Fund Assets

(as of 12/31/2020)

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.

The risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 12/31/1998
Fund Assets $1.65 billion (12/31/2020)
Currency USD
Ticker MJFOX
Cusip 577-130-800
Portfolio Turnover 25.42%
Benchmark MSCI Japan Index
Geographic Focus Japan
Fees & Expenses
Gross Expense Ratio 0.93%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • data_graph_selected Created with Sketch.
  • bar_graph_selected Created with Sketch.
As of 12/31/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund
MJFOX
4.23% 15.87% 29.82% 29.82% 9.32% 11.80% 10.66% 7.19% 12/31/1998
MSCI Japan Index
4.15% 15.29% 14.91% 14.91% 6.45% 9.04% 6.80% 4.29%
As of 12/31/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Japan Fund
MJFOX
4.23% 15.87% 29.82% 29.82% 9.32% 11.80% 10.66% 7.19% 12/31/1998
MSCI Japan Index
4.15% 15.29% 14.91% 14.91% 6.45% 9.04% 6.80% 4.29%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews Japan Fund
MJFOX
29.82% 26.08% -20.18% 33.14% 0.40% 20.83% -2.60% 34.03% 8.32% -7.72%
MSCI Japan Index
14.91% 20.07% -12.58% 24.39% 2.73% 9.90% -3.72% 27.35% 8.36% -14.19%

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 12/31/2020)

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 35 funds
  • 3 YEAR
  • out of 35 funds
  • 5 YEAR
  • out of 29 funds
  • 10 YEAR
  • out of 19 funds
  • 1 YEAR
  • 1st
  • 4 out of 42 funds
  • 3 YEAR
  • 2nd
  • 10 out of 34 funds
  • 5 YEAR
  • 2nd
  • 10 out of 28 funds
  • 10 YEAR
  • 2nd
  • 6 out of 18 funds
  • SINCE INCEPTION
  • 1st
  • 2 out of 7 funds

Ratings agency calculation methodology

Portfolio Managers

Taizo  Ishida photo
Taizo Ishida

Lead Manager

Shuntaro  Takeuchi photo
Shuntaro Takeuchi

Co-Manager

Portfolio Characteristics

(as of 12/31/2020)
49
Number of Securities

Source: BNY Mellon Investment Servicing (US) Inc.

27.9x
P/E using FY1 estimates
25.4x
P/E using FY2 estimates
$43.5 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 12/31/2020)
Name Sector % Net Assets
Shin-Etsu Chemical Co., Ltd. Materials 5.3
Sony Corp. Consumer Discretionary 4.8
TDK Corp. Information Technology 3.9
SMC Corp. Industrials 3.6
M3, Inc. Health Care 3.0
Keyence Corp. Information Technology 3.0
Hoya Corp. Health Care 2.8
SoftBank Group Corp. Communication Services 2.8
Recruit Holdings Co., Ltd. Industrials 2.7
PeptiDream, Inc. Health Care 2.7
TOTAL 34.6

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 12/31/2020)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 22.3 14.0 8.3
Industrials 19.7 20.6 -0.9
Consumer Discretionary 16.8 18.4 -1.6
Health Care 16.8 11.3 5.5
Financials 8.5 8.3 0.2
Communication Services 7.7 9.6 -1.9
Materials 7.0 5.2 1.8
Consumer Staples 0.0 7.6 -7.6
Real Estate 0.0 3.4 -3.4
Utilities 0.0 1.2 -1.2
Energy 0.0 0.5 -0.5
Cash and Other Assets, Less Liabilities 1.2 0.0 1.2

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) 49.3 58.9 -9.6
Large Cap ($10B-$25B) 27.7 22.3 5.4
Mid Cap ($3B-$10B) 13.9 18.9 -5.0
Small Cap (under $3B) 7.9 0.0 7.9
Cash and Other Assets, Less Liabilities 1.2 0.0 1.2

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)
12/15/2020 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.
View History

 

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.

}

For the quarter ending September 30, 2020, the Matthews Japan Fund returned 11.99% (Investor Class) and 12.01% (Institutional Class), while its benchmark, the MSCI Japan Index, returned 7.08%.

Market Environment:

Japanese equity markets slowly climbed a wall of worry in the third quarter amid occasional spikes in COVID-19 cases and weak macro economy numbers. Monetary policies around the world remains extremely accommodative, resulting in risk-taking among investors, especially in growth stocks. Japan is no exception. Japan's central bank announced this year its plans to double exchange-traded funds (ETF) purchases. Japanese government has also passed a stimulus package that is one of the largest in terms of percentage of GDP, both headline numbers and direct spending. On the political front, long-standing Prime Minister Shinzo Abe recently stepped down to undergo treatment for ulcerative colitis. Chief Cabinet Secretary Yoshigide Suga was named as Abe's successor. We do not expect meaningful changes to economic policy as a result of Abe's resignation.

Performance Contributors and Detractors:

Strong stock selection during the quarter contributed to the Fund's relative performance. From a market cap and sector perspective, stocks across all size categories contributed positively to performance. Turning to individual securities, medical platform provider M3 was a contributor to the overall performance for the quarter. Their Japan platform now covers 90% of all doctors in Japan, and the company is using the platform to expand and disrupt in areas such as CRO (contract research organization) and career development, employee recruiting and networking. Overseas markets are a meaningful part of the company's overall revenue, with China being the largest growth driver. On the other hand, telecom carrier Nippon Telegraph and Telephone was a detractor for the quarter. Its defensive characteristics was a negative factor in an environment where investors favored riskier assets. Additionally, Yoshihide Suga, who has long been an advocate for a lower mobile phone fees, was elected Japan's new prime minister, putting additional pressure on the share price. We exited the position in the quarter.

Notable Portfolio Changes:

We initiated a new position in department store and credit card publisher Marui. While ongoing risks linger for retailers, majority of Mauri's earnings come from credit card operations, where card usage grew amid the COVID-19 pandemic. We think these businesses are likely to regain its momentum as consumer traffic recovers. We have also re-initiated a position in medical equipment manufacturer Sysmex, which we believe has the potential to generate attractive earnings growth and gross margin improvement driven by new product launches. We also initiated a handful of other positions geared to improvements in broader macroeconomic conditions. To fund these positions, we exited several stocks, including Lasertec, Asahi Intecc, Infomart, Kao, and Nippon Telegraph and Telephone Corp. Among the positions we exited were stocks that we believed were trading at premium valuations, while their growth rates were starting to slow.

Outlook:

On a relative view, we continue to believe Japan equities are well positioned compared to other developed and emerging market peers. Japanese corporates still have record level of cash on balance sheet, which is a needed cushion to weather the current recessionary environment. On the other hand, if COVID-19 case growth subside and we see faster recovery globally, Japanese corporate profits, geared to global manufacturing activity, may benefit as well. 

From a structural point of view, we continue to believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle, driven by better corporate governance and a higher focus on capital efficiency. Multi-year trends such as productivity growth, health care, technology and material science innovation—where Japanese corporations excel versus global peers—remain intact. Moreover, we expect these trends will accelerate amid the ongoing COVID-19 pandemic. The pandemic has provided stress test on Japan's health care system and costs, as well as labor productivity issues among white-collar jobs as more people work remotely. 

Additionally, the orderly transition of power after the abrupt resignation of Prime Minister Shinzo Abe to the election of Yoshihide Suga is a positive for the market in our view, as it reinforced the political stability that Japan has now, which is a stark contrast to a decade ago where the country had a new prime minister almost every year. Against this backdrop, we are optimistic about the long-term growth opportunities within Japanese equities.

As of 9/30/2020, the securities mentioned comprised the Matthews Japan Fund in the following percentages: M3, Inc., 2.9%; Marui Group Co., Ltd., 1.0%; and Sysmex Corp., 1.5%. The Fund held no positions in Nippon Telegraph and Telephone Corp., Lasertec Corp., Asahi Intecc Co., Ltd., Infomart Corp. and Kao Corp. Current and future portfolio holdings are subject to change and risk.

Average Annual Total Returns - MJFOX as of 12/31/2020
1YR 3YR 5YR 10YR Since Inception Inception Date
29.82% 9.32% 11.80% 10.66% 7.19% 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. Please see the Fund's most recent month-end performance.

Fees & Expenses
Gross Expense Ratio 0.93%
Related Funds

MPACX

Matthews Asia Growth Fund

MAPIX

Matthews Asia Dividend Fund

MATFX

Matthews Asia Innovators Fund

 

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.