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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

-31.23%

YTD Return

(as of 07/01/2022)

$22.00

Price

(as of 07/01/2022)

$996.82 million

Fund Assets

(as of 05/31/2022)

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 $996.82 million (05/31/2022)
Currency USD
Ticker MPACX
Cusip 577-130-867
Portfolio Turnover 42.4%
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 1.07%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 05/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-2.22% -15.14% -29.92% -40.22% 0.34% 2.10% 6.16% 7.25% 10/31/2003
MSCI All Country Asia Pacific Index
0.65% -6.30% -11.37% -16.93% 6.24% 4.80% 6.97% 6.54%
As of 03/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-5.03% -21.57% -21.57% -31.77% 2.73% 5.96% 6.38% 7.97% 10/31/2003
MSCI All Country Asia Pacific Index
-0.53% -5.91% -5.91% -9.22% 6.80% 6.94% 6.41% 6.95%
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 03/31/2022)

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
  • 3rd
  • 16 out of 27 funds
  • 5 YEAR
  • 2nd
  • 12 out of 25 funds
  • 10 YEAR
  • 1st
  • 4 out of 22 funds
  • SINCE INCEPTION
  • 2nd
  • 4 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 03/31/2022)
Fund Benchmark
Number of Positions 55 1,546
Weighted Average Market Cap $83.8 billion $99.4 billion
Active Share 87.8 n.a.
P/E using FY1 estimates 27.0x 13.0x
P/E using FY2 estimates 22.0x 12.2x
Price/Cash Flow 22.1 9.0
Price/Book 3.9 1.6
Return On Equity 11.3 14.1
EPS Growth (3 Yr) 20.4% 7.2%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 03/31/2022)
-3.97%
Alpha
1.19
Beta
108.01%
Upside Capture
124.49%
Downside Capture
0.09
Sharpe Ratio
-0.33
Information Ratio
12.43%
Tracking Error
68.77

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 05/31/2022)
Name Sector Country % Net Assets
PT Bank Rakyat Indonesia Persero Financials Indonesia 4.6
Sony Group Corp. Consumer Discretionary Japan 4.5
CSL, Ltd. Health Care Australia 4.0
HDFC Bank, Ltd. Financials India 4.0
Dabur India, Ltd. Consumer Staples India 3.7
Tokyo Electron, Ltd. Information Technology Japan 3.7
Toyota Motor Corp. Consumer Discretionary Japan 3.5
Shenzhen Inovance Technology Co., Ltd. Industrials China/Hong Kong 3.3
Silergy Corp. Information Technology China/Hong Kong 3.1
GMO Payment Gateway, Inc. Information Technology Japan 3.1
TOTAL 37.5

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 03/31/2022)
  • 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.
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 March 31, 2022

For the quarter ending March 31, 2022, the Matthews Asia Growth Fund returned -21.57% (Investor Class) and -21.53% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned -5.91% over the same period.

Market Environment:

2022 got off to a rocky start in Asian markets, led by Chinese equities. The confluence of a spike in COVID-19 cases and resulting policy of enforced lockdowns in tier one cities, ADR delisting pricing pressures, and investor worries that Russia-like sanctions could be implemented upon select Chinese companies dragged down markets across the region.

The Chinese health care and information technology sectors performed particularly poorly. Chinese internet and biotech stocks remain under regulatory pressure and negative market sentiment toward Chinese government intervention meant that all stocks in these sectors suffered regardless of the degree to which they’re affected by regulatory oversight.

In the second half of Q1, with the prospect of increasing interest rates and inflation, the market rotated back to fundamentals and valuations. While we believe valuations are now high for value names, growth names lagged significantly across Asia, especially in Japan. Additionally, Asian markets sold off aggressively in February as market participants began to digest the fallout and implications of Russia’s attack on Ukraine.

Performance Contributors and Detractors:

From a regional perspective, our allocation and stock selection within China/Hong Kong and Japan detracted the most from relative performance for the quarter. Chinese equity markets struggled over a variety of issues including concerns over regulations faced by internet platform companies, Chinese ADR delistings and general concerns that Chinese zero COVID policy is slowing growth.

Our Japanese holdings were victim to rising rates in the United States as the Japanese yen weakened substantially during the first quarter as the Bank of Japan refused to lift policy rates creating a widening of interest rate differentials between the two countries. In addition, negative market sentiment around Japan’s reliance on imported energy and prospects that purchasing power and consumption spending would slow as a result impacted performance. On the other hand, our allocation and stock selection within Indonesia was the biggest contributor to the Fund’s absolute and relative performance.

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 overweight to energy names and underweight to utilities contributed the most to relative performance.

Turning to individual securities, XPeng, Inc. was the largest detractor to the Funds’ performance over the quarter. XPeng, a Chinese electric vehicle (EV) manufacturer, is one of the fastest growing EV startups that is experiencing increased sales and posting impressive delivery numbers. We believe XPeng is a fundamentally sound business that has been hurt by negative market sentiment.

Chinese health care holdings, Wuxi Biologics, Inc. and Innovent Biologics, Inc. also detracted from the Fund’s 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. Wuxi Biologics, a global Contract Research, Development and Manufacturing Organization (CRDMO) was also hit by negative market sentiment when it was added to the U.S. Commerce departs Unverified List (UVL).

PT Bank Rakyat Indonesia (BRI) was the largest absolute and relative contributor to performance. BRI is the largest banks in Indonesia, specializing in small scale and microfinance style borrowing and lending. The main driver of growth has been an increase in credit performance as well as the creation of innovative digital products reaching its growing customer base.

Notable Portfolio Changes:  

During the first quarter, we exited a long-held position in Wuxi Biologics.  While we believe Wuxi’s medium-term earnings potential, its inclusion on the U.S. Commerce departments Unverified List (UVL) and lack of timeline for Wuxi to be removed from UVL, provided us the opportunity to take profits from this strong performer.

During the quarter, we initiated a position in Shimano, Inc., a Japanese multinational manufacturer of cycling components, fishing tackle and rowing equipment. We believe Shimano is a quality growth company that is cheap from a valuation perspective and in position to benefit from growing demand, particularly in Europe, for cycling equipment.  

Outlook:  

Looking ahead, we believe markets may see more volatility given the significant risks pertaining to the fallout of war, including higher commodity prices, the tightening of U.S. monetary policy, the risks of a protracted Covid led lockdown in China and the regulatory uncertainty. Despite all the challenges in China, we are increasingly optimistic about the negotiations around ADR delisting of Chinese stocks. We believe the outlook for offshore Chinese shares listed in Hong Kong is potentially positive and there is huge potential upside. We are also sanguine on the potential market rotation back to growth stocks as we look ahead to the second half of the year.

View the Fund’s Top 10 holdings as of March 31, 2022. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MPACX as of 03/31/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-31.77% 2.73% 5.96% 6.38% 7.97% 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 1.07%

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.