The Daily Observer London Desk: Reporter- Victoria Smith
No one can accuse the board that oversees the London-listed investment trust Schroder Japan of complacency. Far from it.
Led with aplomb by chairman Philip Kay, it is determined to ensure the £304 million fund remains one of the first calls for investors seeking exposure to the Japanese stock market.
Although stellar fund manager Masaki Taketsume is delivering the goods in terms of investment performance, the trust is struggling to attract buyers for its shares – a problem afflicting most investment trusts.
The result is a share price that frustratingly fails to reflect the value of the trust’s assets. For the past year, the shares have traded at an average 10 per cent discount.
Rather than sitting on their hands and waiting for the tide to turn, Kay and his compatriots on the trust’s board have opted for a bold double-pronged approach.
Last month, the trust announced measures designed to make it more shareholder-friendly – in the hope of reducing the discount and boosting returns for investors.
First, it said that in the future it would strive to pay investors a larger dividend – an annual 4 per cent compared with 2 per cent currently.
Although a large slice of this ‘enhanced’ income will be funded from the dividends paid by the trust’s underlying holdings, some of it will be financed from its assets (in effect a return of capital).
The logic is that many patient investors like to be rewarded with a stream of regular income – annual in the case of Schroder Japan.
Secondly, it said that if the trust failed to outperform its benchmark index – the Tokyo Stock Price I
