Matthews Japan Fund Comments on Relo Group

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Jul 25, 2016

Stock selection accounted for the majority of the Fund’s outperformance. During the second quarter, the financials sector was again the leading source of relative performance. Our strategy to focus on unique and growing financial services firms, while avoiding more traditional names in banking and real estate, has been a significant driver of outperformance for the Fund. Corporate welfare and real estate management company Relo Group (TSE:8876, Financial), credit guarantee company eGuarantee and M&A advisory firm Nihon M&A Center all contributed positively to Fund performance. Additionally, our core holdings in the internet sector such as health care information service company M3 and fashion e-commerce company Start Today continue to deliver impressive returns. However, we have turned a bit more cautious on these names as strong performance has resulted in elevated valuation levels.

From Matthews Japan Fund (Trades, Portfolio) second quarter 2016 commentary.