The Schroder Japan Trust has proposed a new conditional tender mechanism and dividend policy to “improve the attractiveness” of investing in the trust.
The proposed policy states that if the trust does not outperform its benchmark over the next five years beginning 31 July, the board would give a tender option to shareholders of 25% of issued share capital with a price “equal to the prevailing net asset value less costs”.
The trust is measured against the Tokyo Stock Price Index Total Return. In the six months to January 2024, the Schroder Japan trust returned 10.3%, compared to a Topix index average of 9.1%. However, the share price discount for the trust widened to 11.1% in that period. It currently trades at an 8.9% discount.
The trust has also announced the adoption of a dividend policy which pays out 4% of the average net asset value of each financial year. It noted in its statement that it has grown dividends by over 12% yearly on average over the past decade.
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Chairman Dr Philip Kay said: “The company has achieved sustained outperformance over the last four years and my fellow directors and I believe that an annual 4% of NAV dividend and the new five-year Conditional Tender Offer is a great package for all our investors.”
The decisions come after an internal review and discussions with the company’s largest shareholders. There will be no change made to the investment approach.
