TOP
Asia Growth

Matthews Asia Growth Fund MPACX

Snapshot
  • Unconstrained growth strategy investing across Asia Pacific’s developed, emerging and frontier markets
  • Focus on the most profitable and attractive growth opportunities in Asia
  • Highly-differentiated portfolio offers exposure to names often under-represented in broader global equity strategies

10/31/2003

Inception Date

-4.03%

YTD Return

(as of 10/26/2021)

$37.85

Price

(as of 10/26/2021)

$2.13 billion

Fund Assets

(as of 09/30/2021)

Objective

Long-term capital appreciation.

Strategy

Under normal circumstances, the Matthews Asia Growth Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Asia. The Fund may also invest in the convertible securities, of any duration or quality, of Asian companies. The Fund seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information; number of employees; size and stability of cash flow; management’s depth, adaptability and integrity; product lines; marketing strategies; corporate governance; and financial health.

Risks

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging and frontier markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets.

The risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 10/31/2003
Fund Assets $2.13 billion (09/30/2021)
Currency USD
Ticker MPACX
Cusip 577-130-867
Portfolio Turnover 42.8%
Benchmark MSCI All Country Asia Pacific Index
Geographic Focus Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region
Fees & Expenses
Gross Expense Ratio 1.08%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • data_graph_selected Created with Sketch.
  • bar_graph_selected Created with Sketch.
As of 09/30/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-0.24% -9.41% -4.11% 21.34% 14.72% 13.62% 11.66% 10.40% 10/31/2003
MSCI All Country Asia Pacific Index
-1.78% -4.30% 0.62% 18.61% 8.82% 9.96% 8.59% 7.62%
As of 09/30/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-0.24% -9.41% -4.11% 21.34% 14.72% 13.62% 11.66% 10.40% 10/31/2003
MSCI All Country Asia Pacific Index
-1.78% -4.30% 0.62% 18.61% 8.82% 9.96% 8.59% 7.62%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews Asia Growth Fund
MPACX
46.76% 26.18% -16.25% 39.39% 0.92% -0.05% 1.49% 19.35% 17.47% -12.70%
MSCI All Country Asia Pacific Index
20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29% 12.19% 17.05% -14.92%

Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.

Assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. Performance differences between the Institutional class and the Investor class may arise due to differences in fees charged to each class.

Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.

Growth of a Hypothetical $10,000 Investment Since Inception

(as of 09/30/2021)

Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.

The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of fund shares.

Ratings

  • OVERALL
  • out of 10 funds
  • 3 YEAR
  • out of 10 funds
  • 5 YEAR
  • out of 10 funds
  • 1 YEAR
  • 2nd
  • 14 out of 27 funds
  • 3 YEAR
  • 1st
  • 5 out of 27 funds
  • 5 YEAR
  • 1st
  • 5 out of 25 funds
  • 10 YEAR
  • 1st
  • 4 out of 22 funds
  • SINCE INCEPTION
  • 1st
  • 2 out of 10 funds

Ratings agency calculation methodology

Portfolio Managers

Taizo  Ishida photo
Taizo Ishida

Lead Manager

Michael J. Oh, CFA photo
Michael J. Oh, CFA

Co-Manager

Portfolio Characteristics

(as of 09/30/2021)
Fund Benchmark
Number of Positions 69 1,555
Weighted Average Market Cap $67.1 billion $106.6 billion
Active Share 87.9 n.a.
P/E using FY1 estimates 36.2x 14.5x
P/E using FY2 estimates 29.5x 13.8x
Price/Cash Flow 31.6 10.4
Price/Book 5.5 1.8
Return On Equity 2.5 12.2
EPS Growth (3 Yr) 22.9% -2.5%

Sources: BNY Mellon Investment Servicing (US) Inc., Factset Research Systems, Inc., Zephyr StyleADVISOR, Matthews Asia

Top 10 Holdings

(as of 09/30/2021)
Name Sector Country % Net Assets
Wuxi Biologics Cayman, Inc. Health Care China/Hong Kong 6.4
Sony Group Corp. Consumer Discretionary Japan 4.0
BeiGene, Ltd. Health Care China/Hong Kong 3.8
Bajaj Finance, Ltd. Financials India 3.2
Innovent Biologics, Inc. Health Care China/Hong Kong 3.2
HDFC Bank, Ltd. Financials India 2.8
Bilibili, Inc. Communication Services China/Hong Kong 2.8
CSL, Ltd. Health Care Australia 2.7
Sea, Ltd. Communication Services Singapore 2.6
Nintendo Co., Ltd. Communication Services Japan 2.5
TOTAL 34.0

Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.

Source: BNY Mellon Investment Servicing (US) Inc.

Portfolio Breakdown (%)

(as of 09/30/2021)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure

Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.

Not all countries are included in the benchmark index(es).

Source: FactSet Research Systems.

Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.

Distributions

Record Date Ex, Pay and
Reinvest Date
Ordinary
Income
Short Term
Capital Gains
Long Term
Capital Gains
Total Distributions
Per Share
% of NAV Nondividend Distribution (Return of Capital)
12/15/2020 12/16/2020 $0.15061 $0.16831 $1.39495 $1.71387 4.6% N.A.
View History

 

There is no guarantee that the Fund will pay or continue to pay distributions. 

Past performance is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost.

Commentary

Period ended September 30, 2021

For the quarter ending September 30, 2021, the Matthews Asia Growth Fund returned -9.41% (Investor Class) and -9.34% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned -4.30% over the same period.

Market Environment:

China equities weighed heavily on the Asia equity market in the third quarter—while the MSCI China Index declined by -18.1%, Chinese ADRs (American Depository Receipts) collectively declined -30.2% (as represented by the S&P/BNY Mellon China ADR Index), as a series of Chinese government policy tightening moves caused significant disruption in the marketplace. U.S. investors became more cautious toward investing in China in the context of the continuing hard line economic and political stance held by the Biden administration. Industries such as education, games and property fared worse than others because of the crackdown, however even consumer-oriented sectors were weak due to weaker consumer spending. Elsewhere, stock markets around the world faced headwinds as investors grew increasingly concerned with rising inflation and the direction of the U.S. Treasury 10-year bond interest rate. A pressing question on investors’ minds is how “transitory” the current inflation uptick will be—what was expected to be a short-lived inflation increase only three months ago no longer appears to be so fleeting, as we are seeing oil prices and shipping costs rising rapidly. The news of the resignation of Japanese Prime Minister Yoshihide Suga on September 3 gave a brief yet strong rally in the Japanese stock market, with investors believing whoever the next Prime Minister would be, the economy and the stock market would benefit. Mr. Fumio Kishida has been named Mr. Suga’s replacement as President of the Liberal Democratic Party and is currently serving as the incumbent Prime Minister until the next general election on October 31. Prime Minister Kishida is considered to be a consensus choice, and no major economic policy changes are expected.

Performance Contributors and Detractors:

From a country perspective, China was the largest detractor to Fund performance, accounting for almost all of the relative underperformance for the quarter. Our Japan holdings struggled during the quarter, which was somewhat offset by good performance by India and Singapore. From a sector perspective, health care was the largest detractor, followed by communication services. Consumer staples was a bright spot, buoyed by our holdings in Indian companies within the sector.

With respect to individual Fund securities, our Indian holding Bajaj Finance, one of the best growth non-bank financial companies in Asia in our opinion, was the biggest contributor to absolute performance, followed by Japanese conglomerate Sony Group and Avenue Supermarts, the fastest growing and best-run grocery chain store in India, in our view. Not surprisingly, the top 10 detractors were all Chinese companies, with Bilibili being the biggest detractor to absolute performance, as it suffered a significant share price decline due partly to downward price pressures on ADR security types and partly to a government policy crackdown on the game sector. Shimao Services holding was the second largest detractor, as it was drawn into the negative market sentiment toward the real estate sector as a whole, even though the company only collects service fees for the property management services it provides without any assets or liabilities. Chinese health care holdings Wuxi Biologics and Innovent Biologics were also detractors. We continue to believe these companies are long-term opportunities and they remain some of our largest holdings.

Notable Portfolio Changes:

It was a relatively busy quarter in terms of new and exited positions. We exited Chinese e-commerce service company Baozun. Baozun was a Fund holding for quite a long time, however the company’s performance did not live up to our expectations. We also exited from Hansoh Pharma, a Chinese pharmaceutical company with an innovative drug pipeline. Because of Hansoh’s significant exposure to generic drugs within their product mix, the company’s stock prices suffered from the mandated generic drug price cuts of the government’s recent “Volume Based Purchase” program. We exited Japan’s FANUC Corp., a manufacturer of factory automation systems as well as robots/robomachines. The long-term investment thesis was based on the rise in the level of global auto industry’s capital expenditures, however recent supply chain disruptions within the auto industry and weak demand for personal computers slowed down the sales of robots/robomachines, muting the potential for near-term growth.

New positions within the Fund include OBIC Business Consultants, one of the major enterprise resource planning (“ERP”) software companies in Japan, taking advantage of a secondary share offering by the company’s senior management. OBIC has been leading the push for small to medium companies to implement the “cloud transformation” which is the process of migrating software programs and data from local servers to the cloud. This transformation is still in early stages in Japan and we think OBIC would play a central role in this process.

Outlook:

One positive trend we are seeing is an improving level of economic activity across the world due to the slowdown of new cases of COVID-19 as more people get vaccinated. Japan, for example, has now surpassed the U.S. in term of the share of population fully vaccinated. Since it appears that nearly all new cases of COVID-19 are due to the Delta variant in the U.S. and UK, we see no guarantee that economic activity will be fully recovered in the next three to six months. Still, we feel optimism in that vaccine companies around the world are continuing to work at full speed seeking to develop better treatments. On the other hand, one area of concern going forward includes the length of the current supply chain disruptions, from semiconductors to paper. We also note that U.S. new job growth has not been as strong as anticipated. We continue to monitor China equities closely, as while recent market tumult has receded somewhat, we maintain a cautious stance as we consider the merits of good structural growth companies whose stock prices have taken a beating. We see potential within the China A-share market, as shares listed on the Hong Kong and U.S. exchanges have been under pressure due to de-listing concerns. Caution is warranted here though, due to high A-shares valuations. Looking elsewhere, we are more constructive in India and Australia, where we have been adding new positions through the year. We remain committed to the health care sector, which is much less cyclical and where we have been monitoring the continuous effort by companies to develop new treatments to combat unmet medical needs in Asia and in the rest of the world.

 

As of September 30, 2021, the securities mentioned comprised the Matthews Asia Growth Fund in the following percentages: Bajaj Finance, Ltd., 3.2%; Sony Group Corp., 4.0%; Avenue Supermarts, Ltd., 2.1%; Bilibili, Inc. ADR, 2.8%; Shimao Services Holdings, Ltd., 0.9%; Wuxi Biologics Cayman, Inc., 6.4%; Innovent Biologics, Inc., 3.2%; and OBIC Business Consultants Co., Ltd., 1.2%. The Fund held no positions in Baozun, Hansoh Pharma, and FANUC.

Current and future portfolio holdings are subject to change and risk.

 

Average Annual Total Returns - MPACX as of 09/30/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
21.34% 14.72% 13.62% 11.66% 10.40% 10/31/2003

All performance quoted is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund's fees and expenses had not been waived. Please see the Fund's most recent month-end performance.

Fees & Expenses
Gross Expense Ratio 1.08%

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging and frontier markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets.

 

Visit our Glossary of Terms page for definitions and additional information.

Index Definitions

The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Neither the funds nor the Investment Advisor accept any liability for losses either direct or consequential caused by the use of this information.

The views and opinions in the commentary were as of the report date, subject to change and may not reflect current views. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund's future investment intent. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. The information does not constitute a recommendation to buy or sell any securities mentioned.