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LONDON - Schroder Japan Trust PLC (LSE:SJG) has reported a positive half-year performance, with net asset value (NAV) total returns of 4.0% and a share price total return of 3.2%, outpacing the Tokyo Price Index’s (TOPIX) 1.4% return in the same period. The results, covering six months up to January 2025, highlight the trust’s resilience amid Japan’s market volatility and external trade pressures.
The trust’s performance has been attributed to ongoing corporate governance reforms in Japan, rising wages, and increased business investment, which have collectively supported strong earnings from its underlying holdings. The trust’s preference for value-oriented sectors, which have been favorable in the market, along with effective stock selection by lead manager Masaki Taketsume, have contributed to the outperformance.
Schroder Japan Trust has also enhanced its dividend policy, introduced in June 2024, which commits to paying out 4% of the average NAV each financial year. This approach aims to position the trust as an attractive income-focused option. Quarterly dividends for the financial year 2025 have already commenced, with the first two dividends declared at 2.82p and 2.89p per share, respectively.
Taketsume’s strategy during the reporting period involved a steadfast focus on stock selection, avoiding reactive portfolio repositioning in response to macroeconomic or political noise. Notable contributors to the trust’s performance included Fujikura and Hitachi (OTC:HTHIY), which rallied due to growing enthusiasm for generative AI technologies. However, some smaller company holdings faced headwinds and underperformed, such as Tazmo and Fukushima Galilei.
The trust has also made strategic investments in high-quality names at attractive valuations, such as Fanuc (OTC:FANUY), a leader in factory automation and industrial robotics, which is expected to benefit from rising manufacturing capital expenditure.
Since Masaki Taketsume took over as lead manager over five years ago, the trust has delivered NAV total returns of 45.7%, outperforming the TOPIX by 7.5 percentage points as of April 10, 2025. The trust’s value-oriented and high-quality investment approach, along with its enhanced dividend policy and conditional tender offer mechanism, are seen as factors that could support its performance going forward.
Despite risks such as yen volatility, inflation shifts, and tariff uncertainties under President Trump, the long-term investment case for Japan remains compelling. Schroder Japan Trust offers investors access to high-quality, undervalued Japanese companies with strong recovery potential. Currently trading at an 11.4% discount, the trust is positioned as an appealing option for long-term investors seeking exposure to the Japanese market.
This article is based on a press release statement from Kepler Trust Intelligence.
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