The board of Schroder Japan Trust (SJG) has announced a new enhanced dividend and discount management measures, after holding conversations with shareholders.
Dividend:
The board would now like to adopt an enhanced dividend policy to pay out 4% of average net asset value in each financial year. Further details will be provided in the next annual report. The board comments that this policy will not result in a change to SJG’s investment approach. The board also notes that SJG has been able to grow its dividends at an annual rate of 12.7% over the last 10 years, evidence of the increasing importance of dividends within Japanese equities.
Discount control:
The board now proposes a new conditional tender offer mechanism. In the event that the manager does not deliver performance at least in line with the Tokyo Stock Price Index Total Return in sterling terms, its benchmark, over a five-year period starting from 31st July 2024, then the board will put to shareholders a proposal for a tender offer of 25% of the issued share capital at a price equal to the prevailing NAV less costs.
In addition to the above proposal, SJG will continue to maintain its share buyback policy where appropriate.
[QD comment: “Shareholder-aligned changes such as these are always welcome, as they increase the attractiveness of a fund. While these may be likely to help narrow SJG’s discount, the long-term success of the trust will still ultimately be down to the ability to generate superior NAV performance. Something which has become even more important as the trust will now naturally reduce its asset base via increased distributions. However with a current annualised 5-year NAV return of 8.2%, it has historically surpassed the threshold needed to avoid shrinking the fund.” ]