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

-4.81%

YTD Return

(as of 01/14/2022)

$30.45

Price

(as of 01/14/2022)

$1.75 billion

Fund Assets

(as of 12/31/2021)

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.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 10/31/2003
Fund Assets $1.75 billion (12/31/2021)
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 12/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-6.88% -10.99% -14.65% -14.65% 16.48% 13.03% 10.23% 9.54% 10/31/2003
MSCI All Country Asia Pacific Index
1.93% -1.80% -1.19% -1.19% 12.41% 10.23% 8.29% 7.40%
As of 12/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-6.88% -10.99% -14.65% -14.65% 16.48% 13.03% 10.23% 9.54% 10/31/2003
MSCI All Country Asia Pacific Index
1.93% -1.80% -1.19% -1.19% 12.41% 10.23% 8.29% 7.40%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Asia Growth Fund
MPACX
-14.65% 46.76% 26.18% -16.25% 39.39% 0.92% -0.05% 1.49% 19.35% 17.47%
MSCI All Country Asia Pacific Index
-1.19% 20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29% 12.19% 17.05%

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 12/31/2021)

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
  • 4th
  • 27 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 12/31/2021)
Fund Benchmark
Number of Positions 63 1,541
Weighted Average Market Cap $73.2 billion $108.7 billion
Active Share 87.6 n.a.
P/E using FY1 estimates 33.2x 14.2x
P/E using FY2 estimates 29.1x 13.7x
Price/Cash Flow 29.0 10.4
Price/Book 4.9 1.7
Return On Equity 4.6 12.9
EPS Growth (3 Yr) 18.8% -5.0%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 09/30/2021)
4.85%
Alpha
1.18
Beta
134.72%
Upside Capture
107.74%
Downside Capture
0.63
Sharpe Ratio
0.59
Information Ratio
10.04%
Tracking Error
80.00

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 12/31/2021)
Name Sector Country % Net Assets
Sony Group Corp. Consumer Discretionary Japan 5.5
Wuxi Biologics Cayman, Inc. Health Care China/Hong Kong 4.6
HDFC Bank, Ltd. Financials India 3.9
XPeng, Inc. Consumer Discretionary China/Hong Kong 3.6
Silergy Corp. Information Technology China/Hong Kong 3.6
Bajaj Finance, Ltd. Financials India 3.5
CSL, Ltd. Health Care Australia 3.4
BeiGene, Ltd. Health Care China/Hong Kong 3.3
Nintendo Co., Ltd. Communication Services Japan 2.9
Shenzhen Inovance Technology Co., Ltd. Industrials China/Hong Kong 2.6
TOTAL 36.9

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 12/31/2021)
  • 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)
12/14/2021 12/15/2021 $0.00000 $0.47969 $1.17413 $1.65382 4.8% N.A.
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 December 31, 2021

For the year ending December 31, 2021, the Matthews Asia Growth Fund returned -14.65% (Investor Class) and -14.55% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned -1.19% over the same period. For the fourth quarter of the year, the Matthews Asia Growth Fund returned -10.99% (Investor Class) and -11.00% (Institutional Class), while the benchmark returned -1.80%.

Market Environment:

2021 was a weak year in Asian markets, led by China as Chinese regulators ramped up regulatory oversight and the cadence of announcements pressured some of the region’s largest and widest held stocks. In addition, ongoing supply-side shocks, fears of inflation, higher global interest rates, U.S. – China relations and risks to growth from coronavirus delta variant all weighed on sentiment. Offshore Chinese shares listed in Hong Kong and the U.S. were weak, especially within the consumer discretionary and health care sectors, which dampened sentiment across other markets.

The Chinese health care sector also performed poorly due to concerns about tighter regulatory requirements on clinical trials and pricing. China’s innovative and generic drug-price cutting program also added to challenges for Chinese biotech stocks. Negative market sentiment toward Chinese government intervention meant that all Chinese health care stocks suffered regardless of whether they were affected by pricing program. Nevertheless, in our view, innovative companies with much differentiated products will prevail in the mid to long term.

Across the region, growth stocks underperformed as talks of bond purchase tapering and potentially higher interest rates in the U.S. pressured stocks with elevated valuations and lower quality earnings prospects.

Performance Contributors and Detractors:

From a regional perspective, our allocation and stock selection within Japan and China detracted the most from relative performance for the year. Our Japanese holdings struggled by market concerns over the country’s economic growth which remained at recessionary levels throughout 2021. Additionally, Japan growth stocks were not able to reverse the performance gap created by the growth-to-value reversal rally which happened in early 2021. Chinese equity markets struggled over a variety of issues including concerns regarding anti-monopoly regulations faced by internet platform companies, Chinese ADR delistings, solvency risks surrounding China’s property markets and general concerns about growth slowing. On the other hand, India was the biggest contributor to the Fund’s absolute and relative performance. The domestic demand-oriented Indian market rose significantly amidst solid liquidity, a low base effect for earnings and the relaxation of COVID-related restrictions. The economy is seen to be supported by a pro-business government and sectors such as consumer staples, financial services and IT performed well.

From a sector perspective, our overweight and stock selection in health care and our underweight and stock selection in information technology detracted from performance while our stock selection in consumer discretionary and consumer staples contributed the most to relative performance.

Turning to individual securities, Chinese health care holdings Innovent Biologics detracted the most from the Fund’s absolute performance. Innovent, which develops and manufactures high-quality medicines for the treatment of major diseases such as cancer, was likely impacted by concerns over tighter clinical trial requirements in China and intensifying domestic competition. Bilibili, a Chinese online entertainment company focusing on offering content that includes videos, live broadcasting and mobile games, was the second-biggest detractor of the year. It suffered a significant share price decline from the government policy crackdown in the gaming sector and from downward price pressure on ADR security types. Silergy Corp. meanwhile was the largest absolute and relative contributor to performance. While listed in Taiwan, Silergy is a truly global company with an edge in China. The company designs mixed-signal and analog power management integrated circuits that are used in industrial, consumer, computing and communications. Sony Group was also among the top contributors. In an era where many key media products such as motion pictures, music and games are consumed via digital downloads, Sony’s value as a key Intellectual Property (IP) holder has significantly increased in our view. It is a good example of a large, quality growth company with a global customer base.

Notable Portfolio Changes:  

In 2021, we exited Baozun, a Chinese e-commerce service company, which was a U.S. listed American Depositary Receipt (ADR) and had been a long-term underperformer. We also exited ADR-listed Cloopen Group, a cloud-based information technology company, which had significant underperformance since its IPO early in 2021. During the fourth quarter, we converted the portfolio’s American Depositary Receipts (ADRs) in Bilibili and electric vehicle manufacturer XPeng to Hong Kong shares due to increased levels of uncertainty of U.S. – China relations. We also initiated a position in Chinese internet platform company Tencent due to low valuation and Atlassian, a fast growing software company in Australia. We also took a holding in FSN E-Commerce in India via its IPO.  We think this cosmetic focused e-commerce company could be a category-killer company. 

Outlook:  

Looking ahead, we believe China and Japan remain compelling markets from a bottom-up perspective. While the current geopolitical tensions between the U.S. and China is a major source of negative market sentiment, we remain focused on finding secular opportunities in China with strong long-term fundamentals. The recent indication of interest rate cuts in China via the Reserve Requirement Ratio (RRR) is encouraging to boost the declining demand.  This may encourage Chinese mainland investors back into the markets. Additionally, if the U.S. biotech sector recovers, that should also help Chinese biotechs. From a sector perspective, we remain committed to the Chinese health care sector.

From a structural point of view, we continue to believe the earnings capability of Japanese companies has improved meaningfully over the past economic cycle, driven by better corporate governance and a higher focus on capital efficiency. Multiyear trends such as productivity growth, technology and materials science innovation—where Japanese corporations have historically excelled versus global peers—not only remains intact, but we think the pace of change will accelerate as the COVID-19 situation becomes a stress test as more people work remotely.

From a bottom-up perspective, we are finding opportunities in electric vehicle (EV), battery and renewable energy stocks. The core of our process remains in identifying opportunities on a company-by-company basis with strong top-line growth, strong management teams and an ability to grow market share.

 

As of December 31, 2021, the securities mentioned comprised the Matthews Asia Growth Fund in the following percentages: Atlassian Corp., 0.1%; Tencent, 0.2%; FSN E-Commerce, 0.1%; Silergy Corp., 2%; Sony Group Corp., 3.6%; XPeng, Inc., 2.6%; Innovent Biologics, Inc., 3.2%; Bilibili, Inc., 4.7%; Wuxi Biologics Cayman Inc., 5.4%. The Fund held no positions in Baozun, Inc. and Cloopen Group Holding Ltd.

Current and future holdings are subject to change and risk.

 

Average Annual Total Returns - MPACX as of 12/31/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
-14.65% 16.48% 13.03% 10.23% 9.54% 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.