RCS - Schroder Japan Trust - Results analysis from Kepler Trust Intelligence

Schroder Japan TrustAnnouncement

10/10/2025 15:30

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RNS Number : 9743C  Schroder Japan Trust PLC  10 October 2025

Schroder Japan (SJG)

10/10/2025

Results analysis from Kepler Trust Intelligence

Schroder Japan Trust (SJG) has released its annual results for the year ending
31/07/2025, reporting NAV total returns of 6.8% and a share price total return
of 5.6%, outperforming the TOPIX's 4.8% return. Performance was driven by
Masaki Taketusume's emphasis on undervalued companies benefitting from
structural change, above-market exposure to small- and mid-caps where
governance reforms are taking hold, and positions linked to the AI
infrastructure supply chain which are being boosted from growing interest in
generative AI. Masaki's focus on these high-quality, undervalued companies
across the market-cap spectrum, with meaningful participation in Japan's
corporate governance reforms, has been central to SJG's long-term success.
Under his six-year tenure, the trust has outperformed the TOPIX by 17.9
percentage points (to 07/10/2025).

Kepler View

The latest results from Schroder Japan (SJG) reflect another year of solid
progress, with both market and manager delivering in a period shaped by
volatility and reform. Lead portfolio manager Masaki Taketsume continues to
focus on high-quality, undervalued companies across the market-cap spectrum,
targeting those with attractive growth characteristics and meaningful exposure
to Japan's ongoing corporate governance transformations. This focus has driven
outperformance over the reported period and under Masaki's tenure.

Masaki believes Japan's equity market continues to gather momentum,
underpinned by broad-based wage growth, steady inflation and rising business
investment, clear signs the economy is finally emerging from its deflationary
era. Whilst trade tensions and political uncertainty have introduced
occasional volatility, we believe the domestic backdrop remains constructive,
creating fertile ground for active stock pickers like Masaki. In our view,
Japan's reform story remains a durable and self-reinforcing driver of value.
Buybacks and dividends have reached record levels, whilst companies already
compliant with the Tokyo Stock Exchange valuation and return on equity
thresholds continue to invest in growth and efficiency. Alongside this,
domestic demand is strengthening as higher wages and tax-efficient savings
schemes encourage household participation, whilst global investors are
reappraising Japan as a source of value and diversification.

We also think the trust's enhanced dividend policy adds further appeal,
aligning with Japan's growing income opportunity. By committing to distribute
4% of its average NAV each year, SJG not only provides investors with a higher
income stream, but also mirrors the positive changes taking hold across
corporate Japan. As dividend growth and shareholder returns become more
central to the Japanese equity story, SJG's combination of active stock
selection, above market small- and mid-cap exposure and income focus positions
it well, particularly for investors seeking diversified sources of income
beyond traditional UK or European equity strategies.

Whilst periods of slower progress or external pressures, such as trade or
tariff developments, are inevitable, the compounding effect of reform,
investment and earnings growth continues to build momentum. Additionally, new
political leadership is now underway and whilst it's far too early to call the
impact of potential fiscal stimulus, this could be something that supports or
stalls progress. That said, we think the long-term structural shifts
underpinning SJG's strategy remain firmly in place and the trust is well
placed to capture potential of Japan's market evolution, offering investors a
differentiated, high-conviction route into a market where structural change
and improving fundamentals are driving long-term opportunity.

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