Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Schroder Japan. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
SJG continues its strong run of performance versus both the index and sector...
Overview

Masaki Taketsume has managed the Schroder Japan Trust (SJG) since 2019. He employs a highly active, bottom-up strategy, with the aim of maximising long-term capital growth for investors through superior stock selection (see Portfolio section). The Japanese equity market contains a very diverse set of businesses, featuring globally known companies, as well as lesser-known companies with the potential to become household names of tomorrow. However, the market is under-researched particularly further down the market-cap scale, so Masaki leverages the support of the seasoned roster of Tokyo-based investment professionals at Schroders, which in his view, helps him identify and build a diversified portfolio of best-in-class Japanese companies.

Masaki targets stocks that are trading below their fair value, meaning the investment approach has a strong valuation sensitivity and value tilt, something that’s quite different from most peers in the sector. Having this style tilt was one of the driving factors that helped SJG outperform both the index and sector over the last 12 months (see Performance section). However, it’s not a typical ‘old Japan’ style value strategy. Masaki won’t invest in a company purely because it’s cheap. While he wants to target undervalued companies that hold good recovery potential, he also wants to ensure each investment is of high quality, boasting strong growth characteristics. Given that Masaki feels the more growth-orientated stocks are expensive, potentially even overvalued at the minute, he is likely to continue tilting the portfolio towards value stocks, including a bias towards domestic-focussed mid and small caps with robust pricing power and strong corporate governance, but won’t sacrifice his requirement for quality as well as price.

SJG trades on a Discount of 10.2%, at the time of writing, compared to a 6.6% average for the AIC Japan sector.

Kepler View

The Japanese market has continued its strong run of performance this year and looks to remain an appealing place to invest moving forward. A mixture of low valuations, long-term structural changes, such as corporate governance reform and the welcome return of modest inflation, paints an encouraging outlook for the economy and a potentially exciting environment to invest in. We think SJG offers investors an attractive way to access the market given Masaki’s stock-driven and valuation-sensitive stock-picking strategy, as well as offering investors a potential source of differentiated returns to the index and peers.

One of SJG’s key differentiators is Masaki’s tilt towards value, something quite different to most peers in the sector. He targets undervalued companies where the long-term growth prospects are not fully priced in and where there is potential for a turnaround. However, he doesn’t want to invest simply because a company is cheap, and a focus on quality is also paramount. We think that Masaki’s preference for investing in undervalued stocks, and his ability to identify those of higher quality sitting at attractive prices, could offer a good form of stock or sector diversification against value strategies, as well as growth. In our view, SJG provides exposure to a well-diversified portfolio of Japanese companies and if the manager’s positive outlook proves right, its discount may offer investors an attractive entry point, providing an extra kicker to returns if it narrows.

Bull

  • Deep resources and an on-the-ground research team are an advantage with stock selection
  • Current discount may present an attractive long-term entry point for investors
  • Contrarian approach is in contrast with the average trust in the sector, offering differentiated source of return potential

Bear

  • Gearing can magnify the losses in a market downturn
  • Trust may underperform during growth-stock rallies
  • While offering a greater return potential, having a bias towards mid and small caps can increase risk
Continue to Portfolio

Fund History

10 Jul 2024 Things can only get better
Discounts are yawning but markets are thawing and boards are on the offensive; Labour might not be the only thing making a comeback this year...
03 Jul 2024 Monthly roundup: merger news and highlights from our June small cap event
Jo and Ryan discuss the latest news, reviews and interviews in the investment trust world...
02 Jul 2024 Trusts in Focus: Schroder Japan
We turn the spotlight on the new enhanced dividend and discount management policy for SJG...
01 May 2024 From riches to rags to riches, is this time really different for Japan?
Japan’s decade-long corporate governance push is finally leading to significant improvements to underlying Japanese businesses…
26 Apr 2024 Schroder Japan Trust plc: Can the Japanese stock market continue to scale new heights?
Why now is a particularly exciting environment for active, high conviction stock pickers in the region...
19 Apr 2024 Results analysis: Schroder Japan
SJG continues to outperform the TOPIX Index, buoyed by good stock selection and an in vogue ‘value’ style of investing…
08 Dec 2023 Fund Analysis
SJG continues its strong run of performance versus both the index and sector...
15 Nov 2023 Finding value in Japan
SJG is taking advantage of attractive valuations and corporate reforms…
15 Nov 2023 The Asian century
Failing to invest in Asia means omitting half the global economy from your portfolio…
02 Oct 2023 Results analysis: Schroder Japan Trust
SJG has delivered outperformance of the Japanese markets for three consecutive years…
27 Sep 2023 Ohayō Japan!
Our analysts discuss what they think may be a new dawn for the Land of the Rising Sun...
07 Jun 2023 Under pressure
We identify the equity trusts which have delivered the best downside protection in recent years...
02 Mar 2023 The Devil’s in the demographics
China’s population is in decline - should it turn east or west for inspiration..?
15 Feb 2023 Lost in translation
We argue Japanese equities look attractive on both a short and long-term view…
10 Feb 2023 Fund Analysis
Japan could be one of the most attractive countries for investment in 2023…
16 Dec 2022 Japan’s chance to shine – find out why this time is different
Schroder Japan Growth Fund - positioned to capture the opportunity in Japan...
16 Jun 2022 Fund Analysis
SJG is on a run of strong performance, while the discount remains attractive…
27 Apr 2022 Finding value in a haystack
Non-income value strategies are becoming increasingly scarce, but the holdouts represent attractive near-term opportunities…
05 Aug 2021 Fund Analysis
As the most value-exposed trust in its sector, SJG has been a clear beneficiary of the reflationary rally…
14 Jul 2021 Grade inflation
We look at how our discounted opportunities portfolio has done in the first half of the year and update on the performance of our long-term rated funds…
06 Jul 2020 Fund Analysis
Operating a disciplined and consistent investment approach, SJG nonetheless trades on the widest discount in the sector...
04 Jun 2020 A different approach to Japan
Schroder Japan Growth offers a solid yield and a crisp focus on valuation which differentiates it from its peers...
18 Mar 2020 Their darkest hour?
We update our shortlist of discount opportunities...
28 Nov 2019 Is there a generational opportunity in Japan?
Two of our analysts go head-to-head, arguing the case for Japan...
20 Nov 2019 Off to the races: Kepler's fund shortlists post strong performance
We check in on our growth, income and annuity income shortlists launched earlier this year, which have performed strongly in 2019 to date...
11 Sep 2019 Fund Analysis
Despite clear continuity of management style, the retirement of Andrew Rose has seen this trust move to a wide discount versus peers...
01 May 2019 Sweet or sour?
Three months in, we check up on the progress of our discount opportunities portfolio...
30 Apr 2019 Fund Analysis
Schroder Japan Growth, despite its name, is the most value-exposed trust in the AIC Japan peer group...
22 Feb 2017 A challenge of perception
Asian Total Return Investment Company chairman David Brief says the trust's total return focus is misunderstood by many investors....
12 Jul 2016 Fund Analysis
12 Jul 2016 The investment trust advantage
The UK's leading managers tell us how they use investment trusts to maximise returns...
View all

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