189.50
up 2.00 (1.07%)
209.15
AUM (m): 261.46
Premium/Discount (%): -9.00
Yield (%): 1.10
Gearing (%): 15.86
Schroder Japan Growth plc GBP
Fund Manager(s)
Andrew Rose
Andrew has been with Schroders since 1981 and has over 30 years of investment experience, which has been largely focused on Japanese equities.
He re-located to London in 2006 from Tokyo where he spent five years as the Head of Japanese Equities.
He assumed management of the Schroders Japan Growth Fund plc in November 2007.
Board of Directors
Jonathan Taylor*+ Chairman
Mr Taylor is Chairman and Managing Director of Dragon Partners Limited. He is a Director of Aberdeen Greater China Fund Inc. He was previously a Director of Baring Asset Management Limited (1976–1997) where he was closely involved with the development of its client base in Japan. He is a Barrister at law.
Anja Balfour*+
Mrs Balfour spent 22 years managing Japanese, Far Eastern and International equity portfolios for Stewart Ivory, Baillie Gifford and, latterly, Axa Framlington. She is a non-executive director of Martin Currie Asia Unconstrained Trust plc, F&C Global Smaller Companies PLC and is a trustee of Venture Scotland, a charity specialising in personal development for young people. She is a member of the CFA Society of the UK and Archangel Informal Investment, a business angel syndicate.
Alan Gibbs*+
Mr Gibbs worked for the Fleming Group for 17 years with responsibility for investments in Japan and throughout the Far East, after which he helped set up and run two Far Eastern brokerages before joining J.O. Hambro
(latterly Waverton), where he ran Far Eastern funds. Mr Gibbs is now Chairman of the Burdett Trust, a nursing charity and an independent non-executive Director of the M&G Charibond Charities Fixed Interest Common Investment Fund
(Charibond) and a member of the Advisory Committee of the M&G Equities Investment Fund for Charities (Charifund).
Richard Greer*+
Mr Greer worked in Japan for fifteen years, for Jardine Matheson and subsequently, as branch manager, for Baring Securities (Japan) Limited, until 1993. He has extensive experience of company research, and headed the group established by the Japanese Ministry of Finance representing the EU investment banks and brokerages. On returning to London, he was global head of research at Barings, Caspian Limited and Commerzbank AG, before becoming a partner at WMG Limited, a wealth management group, and head of marketing at Toscafund Limited. He is currently Chairman of Myanmar Strategic Holdings Limited.
Belinda Richards*+
Mrs Richards is a former senior partner at Deloitte LLP with a thirty year career specialising in business operations and strategy development with a particular focus on the Financial Services and Consumer Products sectors. She is currently a non-executive director and the chair of the audit committee of Wm Morrison Supermarkets PLC, a non-executive director and the senior independent director of Grainger plc, a non-executive director of The Monks Investment Trust plc and Phoenix Group Holdings. Mrs Richards is a former director of Aviva UK Life and Pensions, Balfour Beatty plc and Friends Life Group plc. In addition, she is a member of the FRC’s Advisory Group of Audit Committee Chairmen and a member of the Governing Council of the Centre for the Study of Financial Innovation.
Additional information
* Member of the Audit and Management Engagement Committees
+ Member of the Nomination Committee
Mr Greer is Chairman of the Nomination and Management Engagement Committees
Ms Balfour is Chairman of the Audit and Risk Committee
Governance documents
Terms of reference:
Management Engagement
Nomination Committee
Audit and Risk Committee
Environmental, Social and Governance Policy
Commentary - Covering fourth quarter, October-December 2017
Market Summary
With the exception of a brief setback in mid-November, Japanese equities gained ground steadily to record a rise of 8.7% for the quarter. The yen moved in a relatively narrow range against other major currencies and ended little-changed over the quarter, although the market return to a sterling-based investor was reduced slightly to 7.7%.
After considerable initial uncertainty over the potential outcome of October’s snap general election, the likelihood of an LDP (Liberal Democratic Party of Japan) victory increased steadily, enabling equity investors to form a view on the likely continuation of both monetary and fiscal policies. This more stable sentiment was matched by a significant pick-up in net purchases of Japanese equities by foreign investors which helped to maintain upward momentum in the market after Mr Abe’s election victory was confirmed.
After a couple of months out of the headlines, North Korea reignited geopolitical risk in November with a further long-range missile test. There were no obvious signs of constructive engagement from any of the interested parties, making any resolution of this issue difficult to forecast.
The latest quarterly corporate results season continued the strong trends seen in the previous three months as the majority of companies again exceeded expectations and the positive cycle in earnings revisions was maintained. Individual share prices reacted positively to any evidence of improved pricing power as Japan exits a long period of deflation.
After some slightly disappointing economic numbers seen in November, virtually all the data released in December exceeded expectations. The unemployment rate declined to 2.7%, a new low for this cycle, while the number of people employed extended the rising trend seen throughout 2017. Inflation data also unexpectedly improved and industrial production and retail sales were comfortably ahead of forecast. Meanwhile, the Bank of Japan’s quarterly Tankan survey recorded the strongest sentiment among large manufacturing companies for more than 11 years.
Quarterly Overview
The Fund outperformed the benchmark in the quarter mainly as a result of positive contribution from sector allocation.
The strongest individual stock contribution came from SK Kaken, a small cap paint manufacturer which recovered after underperforming over the previous six months. Nippon Thompson also had a positive impact after rising sharply in late December.
These gains were partly offset by a negative impact from KDDI, a major telecom operator, which declined in December, in line with the whole sector, on fears of increased competition. Hi Lex, a small cap auto parts supplier, also underperformed.
Investment Outlook
Having seen gradual but persistent improvements throughout 2017, Japan’s economy is entering 2018 in relatively good shape and this is reflected in robust corporate profit growth. Although some of this has already been discounted by investors in 2017, expectations for the strength and duration of this cycle are being extended, leaving room for valuations to rise further from here.
The main political events which could shape domestic policy this year include the end of Mr Kuroda’s current term as governor of the Bank of Japan in March and the expiry of Mr Abe’s term as leader of the LDP in September. We currently see no serious challenge to either of the incumbents. In the absence of any significant domestic political uncertainty we would continue to see the main risks to Japan being external.
Although we expect no change in policy from the Bank of Japan in the near term, the ongoing improvement in the domestic economy is leading to growing speculation about how and when the authorities might declare that Japan has exited deflation on a sustainable basis. The mechanism for any subsequent tapering of monetary policy is unlikely to affect our views on individual stocks or their long-term profit potential, but could have implications for overall market sentiment and foreign investor activity. At this stage we would still expect any moves towards an implicit normalisation of Japan’s monetary policy to provide a positive environment for equities, however as with any forecast, it cannot be guaranteed.
Risk Considerations
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested. The trust Invests in smaller companies that may be less liquid than in larger companies and price swings may therefore be greater than investment trusts that invest in larger companies. The trust will invest solely in the companies of one country or region. This can carry more risk than investments spread over a number of countries or regions. The trust holds investments denominated in currencies other than sterling, investors should note that exchange rates may cause the value of these investments, and the income from them, to rise or fall. The trust may borrow money to invest in further investments, this is known as gearing. Gearing will increase returns if the value of the investments purchased increase in value by more than the cost of borrowing, or reduce returns if they fail to do so.