10/31/2003
Inception Date
-7.58%
YTD Return
(as of 05/12/2021)
$36.45
Price
(as of 05/12/2021)
$2.27 billion
Fund Assets
(as of 04/30/2021)
Long-term capital appreciation.
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.
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.
| Inception Date | 10/31/2003 | |
| Fund Assets | $2.27 billion (04/30/2021) | |
| Currency | USD | |
| Ticker | MPACX | |
| Cusip | 577-130-867 | |
| Portfolio Turnover | 42.8% | |
| Benchmark | MSCI All Country Asia Pacific Index | |
| Geographic Focus | Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region | |
| Gross Expense Ratio | 1.08% | |
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
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 (as of 03/31/2021)
CATEGORY: Diversified Pacific/Asia
Quartile & Rankings (as of 03/31/2021)
CATEGORY: Pacific Region Funds
Ratings agency calculation methodology
Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.
The Overall Morningstar® Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.
Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
Lipper Analytical Services, Inc., rankings are based on total return, including reinvestment of dividends and capital gains for the stated periods. Funds are assigned a rank within a universe of funds similar in investment objective as determined by Lipper. For the absolute rankings shown the lower the number rank, the better the Fund performed compared to other funds in the classification group. Lipper also calculates a quartile ranking which divides the peer group into quartiles to identify funds of similar quality. Funds in the 1st or 2nd quartile had outperformed the average fund in the peer group while funds in the 3rd or 4th quartile had underperformed.
Lead Manager
Portfolio Manager
Taizo Ishida is a Portfolio Manager at Matthews Asia. He manages the firm’s Asia Growth and Japan Strategies. Prior to joining Matthews Asia in 2006, Taizo spent six years on the global and international teams at Wellington Management Company as a Vice President and Portfolio Manager. From 1997 to 2000, he was a Senior Securities Analyst and a member of the international investment team at USAA Investment Management Company. From 1990 to 1997, he was a Principal and Senior Research Analyst at Sanford Bernstein & Co. Prior to beginning his investment career at Yamaichi International (America), Inc. as a Research Analyst, he spent two years in Dhaka, Bangladesh as a Program Officer with the United Nations Development Program. Taizo received a B.A. in Social Science from International Christian University in Tokyo and an M.A. in International Relations from The City College of New York. He is fluent in Japanese.
Co-Manager
Portfolio Manager
Michael Oh is a Portfolio Manager at Matthews Asia. He manages the firm's Asia Innovators and Korea Strategies and co-manages the Asia Growth Strategy. Michael joined Matthews Asia in 2000 as a Research Analyst and has built his investment career at the firm. Michael was promoted from Research Analyst to Assistant Portfolio Manager in 2003. In 2006 and 2007, he was promoted to Lead Manager of the Matthews Asia Innovators Strategy and the Matthews Korea Strategy, respectively. From 2000-2003, Michael's research focused on the technology sector supporting multiple strategies managed by the founders of the firm. As a research analyst, he contributed investment ideas to the broader Matthews Asia investment teams. Michael received a B.A. in Political Economy of Industrial Societies from the University of California, Berkeley. He is fluent in Korean.
Source: BNY Mellon Investment Servicing (US) Inc.
Source: FactSet Research Systems
Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: BNY Mellon Investment Servicing (US) Inc.
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.
Visit our Glossary of Terms page for definitions and additional information.
The Markit iBoxx Asian Local Bond Index tracks the total return performance of a bond portfolio consisting of local-currency denominated, high quality and liquid bonds in Asia ex-Japan. The Markit iBoxx Asian Local Bond Index includes bonds from the following countries: China (on- and offshore markets), Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.
The J.P. Morgan Asia Credit Index (JACI) tracks the total return performance of the Asia fixed-rate dollar bond market. JACI is a market cap-weighted index comprising sovereign, quasi-sovereign and corporate bonds and is partitioned by country, sector and credit rating. JACI includes bonds from the following countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand.
The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI All Country Asia Pacific Index is a free float–adjusted market capitalization–weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Index is a free float-adjusted market capitalization-weighted index of Chinese equities that includes H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges, Hong Kong-listed securities known as Red chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China) and foreign listings (e.g. ADRs).
The MSCI China All Shares Index captures large and mid-cap representation across China A shares, B shares, H shares, Red chips (issued by entities owned by national or local governments in China), P chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g. ADRs). The index aims to reflect the opportunity set of China share classes listed in Hong Kong,Shanghai, Shenzhen and outside of China.
The MSCI Emerging Markets (EM) Asia Index is a free float-adjusted market capitalization weighted index of the stock markets of China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Taiwan and Thailand. The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The S&P Bombay Stock Exchange 100 (S&P BSE 100) Index is a free float–adjusted market capitalization–weighted index of 100 stocks listed on the Bombay Stock Exchange.
The MSCI Japan Index is a free float–adjusted market capitalization–weighted index of Japanese equities listed in Japan.
The Korea Composite Stock Price Index (KOSPI) is a market capitalization–weighted index of all common stocks listed on the Korea Stock Exchange.
The MSCI All Country Asia ex Japan Small Cap Index is a free float–adjusted market capitalization–weighted small cap index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Small Cap Index is a free float-adjusted market capitalization-weighted small cap index of the Chinese equity securities markets, including H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges,Hong Kong-listed securities known as Red Chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs).
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.
Commentary
Period ended March 31, 2021
For the quarter ending March 31, 2021, the Matthews Asia Growth Fund returned -1.90% (Investor Class) and -1.88% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 2.42%.
Market Environment:
In January and early February, North Asia equities continued to climb, leading the region with strong absolute performance. However, in the middle of February, Asia equity prices became more volatile as growth prospects and talks of U.S. stimulus led to a spike in U.S. Treasury rates. The U.S. dollar strengthened and commodity prices grinded higher causing analysts to speculate about higher inflation. Stocks associated with a cyclical recovery and value-oriented companies outperformed growth stocks. Cyclical sectors like energy, materials, real estate and financials performed well while health care and consumer stocks lagged. By the end of the quarter, Asian large caps and growth stocks suffered the most while small caps and lower quality, cyclically oriented stocks rallied the most.
Chinese equities were particularly volatile in the quarter. During the first six weeks of the reporting period, Chinese equities rose amid the transition of power to a Biden administration and persistent upward revisions to 2021 consensus earnings and GDP growth estimates. China’s broader markets then weakened, ending the quarter slightly negative, led by selling among Chinese retail investors. Japan’s markets also experienced some volatility in the quarter, but ultimately ended the period with slightly positive returns. The uptick in global economic activity is broadly positive for Japan’s economy, which has a significant export sector. Meanwhile, Indian equities were a brighter spot in the region. Proposed government spending is favorable for growth. In addition, India’s current account has switched from deficit to surplus as foreign exchange reserves have grown.
Performance Contributors and Detractors:
Detractors in the quarter were largely stock specific, centering around three small positions. Cloopen Group Holding is a Chinese data center and software company whose earnings were weaker than the market expected following its recent IPO. AI inside is a Japanese AI company that recently announced a change in their business strategy, dampening investor sentiment. And Frequency Therapeutics, which focused on regenerative medicine to cure hearing loss, did not meet the much expected end point of its phase two clinical study. Each company experienced significant stock price declines in the quarter. While these outcomes were disappointing, the position sizes of these three stocks was small by design. We tend to keep positions in higher risk, early stage companies small until these companies begin meeting their stated goals and milestones. We exited AI inside and Frequency Therapeutics in the quarter and continue to monitor Cloopen Group Holdings.
Contributors in the quarter were also stock specific, including Bilibili, BeiGene and Shimao Services Holdings. Chinese video content company Bilibili, which caters to young viewers, attracted new users as the pandemic accelerated demand for online entertainment and social media interaction. We see Bilibili emerging as a new, distinct social media platform in its own right. Beigene is a Chinese health care company focusing on cancer treatments. The company is becoming better known among investors across Asia and continues to execute well on its core business model. Shimao Services Holdings is a Chinese real estate property management company. We purchased the company at attractive valuations at the IPO in October 2020 and the stock may have benefited from investors interest in stable, cash-flow generative businesses amid the volatility of the quarter.
Notable Portfolio Changes:
During the quarter, we rotated capital a bit, expanding our weight in India. Becoming more constructive on India’s equity markets in general, we initiated new positions in two Indian consumer staples companies. Avenue Supermarts runs grocery stores, department stores and hypermarkets throughout India. Dabur India is a leading manufacturer of personal care products, including Ayurvedic medicine and natural consumer products. Both are well positioned in our view to capture a greater share of consumer spending. With these new additions, the portfolio now has six positions in India. We also initiated a new position in Japanese semiconductor equipment company Advantest Corp. Along with prior holdings Taiwan Semiconductor Manufacturing Co (TSMC) and Shin-Etsu Chemical, we now hold three holdings in the semiconductor space. Against the current backdrop of an overall computer chip shortage globally, all three companies may be well positioned for long-term growth. Two key trends in this space we are following include ever-increasing capital intensity of the whole semiconductor industry and ever-expanding amount of testing needed for fabricating computer chips.
Outlook:
Looking ahead, we are focusing on both cyclical and structural growth opportunities. Health care falls into the structural side of the opportunity set, in our view. The fortunes of health care companies tend to have little to do with macroeconomics and much more to do with maintaining strong pipelines of innovative new products and delivering strong value to their customers and shareholders. We expect to maintain our overweight in the health care sector, as it can provide both growth and ballast over time.
While market benchmarks demonstrated a brief rotation toward value stocks in recent months, we expect that future market gains may be more broad-based. Cyclical growth trends should pick up the pace in our view: growth in areas such as semiconductors, industrials and real manufacturing companies may continue. The pace of the global economic recovery and the size of some government stimulus packages have the potential to create inflation risks, although inflation to date has remained in check.
Trade tensions between the U.S. and China are unlikely to fade, but they may also be less likely to escalate under the new U.S. administration. China’s domestic economy has enjoyed a strong V-shaped recovery based on keeping the pandemic in check. Normal daily foot traffic has largely resumed in China. Elsewhere in the region, Japan may be well positioned to benefit from a global, cyclical recovery. Strong in industrials and exports, Japan’s economy may be buoyed by any pick up in global trade. As always, we remained engaged in fundamental, bottom-up research—company by company, stock by stock—to identify attractive growth opportunities throughout the region.
As of 3/31/21, the securities mentioned comprised the Matthews Asia Growth Fund in the following percentages: Cloopen Group Holding, Ltd. ADR, 0.6%; Bilibili, Inc. ADR, 5.5%; BeiGene, Ltd. ADR, 3.5%; Shimao Services Holdings, Ltd., 1.7%; Avenue Supermarts, Ltd., 1.4%; Dabur India, Ltd., 1.2%; Advantest Corp., 1.5%; Taiwan Semiconductor Manufacturing Co., Ltd. ADR, 1.9%; Shin-Etsu Chemical Co., Ltd., 1.5%. The Fund held no positions in AI inside or Frequency Therapeutics. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MPACX as of 03/31/2021
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
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.