Schroder Japan (SJG)

Schroder Japan Trust (SJG) pursues a high-conviction, bottom-up approach under lead manager Masaki Taketsume, centred on identifying high-quality companies where valuations do not fully reflect long-term earnings potential. The process is disciplined but flexible, with a bias towards value-oriented businesses, particularly within the small- and mid-cap universe, where inefficiencies are more pronounced.

This positioning has contributed to strong long-term Performance, since Masaki’s appointment in July 2019, with SJG delivering NAV and share price total returns of 114.7% and 130.3%, respectively, ahead of 75.2% for the TOPIX Index. Performance has also remained robust over the past year, benefitting from exposure to structurally supported areas such as artificial intelligence, industrial automation and improving corporate governance.

From a Portfolio perspective, Masaki is focussed on under-researched businesses with improving fundamentals, with positioning reflecting his preference for second-order beneficiaries of structural themes, often accessed through less crowded parts of the value chain. For example, favouring JX Advanced Metals over highly valued proxy for the sector Advantest. New positions over the year include Capcom, where the investment case centres on the durability and monetisation of its intellectual property, whilst exits from Rheon Automatic Machinery and TAZMO reflect a disciplined approach to capital reallocation as conviction evolves.

In 2024, the board introduced an enhanced Dividend policy, targeting a distribution equivalent to 4% of average NAV. This is now fully in effect and has increased SJG’s appeal as an income option within the Japan sector, although it does introduce greater variability, with dividends no longer fully covered by earnings and partly supported by revenue and capital reserves.

At the time of writing, SJG trades on an 8.1% Discount, within its five-year average. SJG has been awarded a Kepler Income Rating for 2026.