The board of directors of the financial SCHRODER JAPAN TRUST, which is listed in London, cannot be accused of being careless. Not at all.
It is committed to making sure the £304 million fund stays among the top options for investors looking to gain access to the Japanese stock market, and it is ably led by chairman Philip Kay.
The trust is having trouble finding investors for its shares, a concern that most investment trusts face even when exceptional fund manager Masaki Taketsume is producing excellent investment results.
Instead of doing anything and hoping that things will improve, Kay and his fellow fellow directors of the trust have taken a risk through using a two-pronged strategy.
SCHRODER JAPAN TRUST made changes to improve shareholder value last month with the goal of decreasing the discount and increasing investor returns.
First, it announced that it would work to increase the dividend it paid to investors in the future, from the current 2 percent to an average 4 percent.
Part of this ‘increased’ income will come from the trust’s assets (i.e., return of capital), but a significant portion will come from dividend payments by the trust’s underpinning holdings.
The reasoning for this is because many patient investors prefer to be paid with a consistent income stream—annually in Schroder Japan’s for example.
This would enable them to sell 25% of their ownership at a price that would more accurately reflect the value of the property of the trust than its shares.
The steps are a “great package for all our investors,” according to Kay. Taketsume won’t seem to be feeling the heat, despite the fact that they will put pressure on him to keep outperforming.
Speaking from Tokyo five days prior, the manager stated that his approach to investing, which centers on acquiring companies at a discount, will remain unchanged.
“Since I assumed leadership, the SCHRODER JAPAN TRUST has performed admirably,” he remarked, approximately five years ago.
“Hopefully, these fresh initiatives will reduce the share price discount, which will increase the trust’s appeal.”
Taketsume has a strong record of investing performance, with five-year returns of fifty percent, as opposed to the SCHRODER JAPAN TRUST comparable market average of twenty-eight percent. Additionally, he believes that it can go on.
“The equity market has more upward potential,” he asserts. Japan’s inflation is returning, which helps businesses with pricing power, particularly those that cater to the home market. As a result, this is raising corporate profits.
The portfolio of 62 companies has a preference toward domestically oriented businesses. Fukushima Galilei, a producer of environmentally friendly freezers for the restaurant and medical industries, is a prime example. The SCHRODER JAPAN TRUST started to make investments in the business toward the end of 2019 and currently accounts for 1.2% of the fund’s total assets.
Taketsume states, “Fukushima has a great reputation in the domestic market.” “It has passed these on to clients and higher revenue, despite rising labor and material costs.”
The SCHRODER JAPAN TRUST ticker is SJG, and its stock exchange code is 0802284. Annual maintenance fees are fair at 1.14 percent.
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