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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

-3.07%

YTD Return

(as of 04/13/2021)

$38.23

Price

(as of 04/13/2021)

$2.24 billion

Fund Assets

(as of 03/31/2021)

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.

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

Fund Facts
Inception Date 10/31/2003
Fund Assets $2.24 billion (03/31/2021)
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 1.09%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 03/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-6.61% -1.90% -1.90% 73.85% 12.95% 16.54% 10.49% 10.86% 10/31/2003
MSCI All Country Asia Pacific Index
-1.03% 2.42% 2.42% 52.20% 8.49% 12.52% 7.00% 7.96%
As of 03/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-6.61% -1.90% -1.90% 73.85% 12.95% 16.54% 10.49% 10.86% 10/31/2003
MSCI All Country Asia Pacific Index
-1.03% 2.42% 2.42% 52.20% 8.49% 12.52% 7.00% 7.96%
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 03/31/2021)

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 14 funds
  • 3 YEAR
  • out of 14 funds
  • 5 YEAR
  • out of 13 funds
  • 10 YEAR
  • out of 11 funds
  • 1 YEAR
  • 1st
  • 5 out of 28 funds
  • 3 YEAR
  • 1st
  • 5 out of 28 funds
  • 5 YEAR
  • 1st
  • 2 out of 25 funds
  • 10 YEAR
  • 1st
  • 4 out of 16 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 03/31/2021)
71
Number of Securities

Source: BNY Mellon Investment Servicing (US) Inc.

29.2x
P/E using FY1 estimates
27.7x
P/E using FY2 estimates
$60.6 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 03/31/2021)
Name Sector Country % Net Assets
Bilibili, Inc. Communication Services China/Hong Kong 5.5
Wuxi Biologics Cayman, Inc. Health Care China/Hong Kong 4.6
BeiGene, Ltd. Health Care China/Hong Kong 3.5
Sony Corp. Consumer Discretionary Japan 3.2
Innovent Biologics, Inc. Health Care China/Hong Kong 3.2
XPeng, Inc. Consumer Discretionary China/Hong Kong 2.8
PT Bank Rakyat Indonesia Persero Financials Indonesia 2.8
HDFC Bank, Ltd. Financials India 2.6
Shenzhou International Group Holdings, Ltd. Consumer Discretionary China/Hong Kong 2.2
SoftBank Group Corp. Communication Services Japan 2.1
TOTAL 32.5

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 03/31/2021)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Health Care 37.7 7.1 30.6
Consumer Discretionary 14.8 17.2 -2.4
Communication Services 11.6 10.1 1.5
Information Technology 9.2 18.3 -9.1
Financials 7.8 16.8 -9.0
Industrials 4.8 10.5 -5.7
Consumer Staples 4.4 5.6 -1.2
Energy 3.3 2.1 1.2
Real Estate 2.3 4.2 -1.9
Materials 1.5 6.1 -4.6
Utilities 0.0 1.9 -1.9
Cash and Other Assets, Less Liabilities 2.7 0.0 2.7

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

Country Fund Benchmark Difference
China/Hong Kong 46.4 29.1 17.3
Japan 26.7 32.6 -5.9
India 9.4 6.3 3.1
Australia 3.4 9.2 -5.8
Indonesia 3.2 0.8 2.4
United States 3.0 0.0 3.0
Taiwan 1.9 8.9 -7.0
Singapore 1.5 1.5 0.0
Switzerland 0.7 0.0 0.7
Vietnam 0.7 0.0 0.7
Bangladesh 0.4 0.0 0.4
South Korea 0.0 8.7 -8.7
Thailand 0.0 1.2 -1.2
Malaysia 0.0 0.9 -0.9
Philippines 0.0 0.4 -0.4
New Zealand 0.0 0.3 -0.3
Cash and Other Assets, Less Liabilities 2.7 0.0 2.7

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 56.2 62.4 -6.2
Large Cap ($10B-$25B) 10.5 20.3 -9.8
Mid Cap ($3B-$10B) 18.7 16.7 2.0
Small Cap (under $3B) 11.9 0.6 11.3
Cash and Other Assets, Less Liabilities 2.7 0.0 2.7

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 December 31, 2020

For the year ending December 31, 2020, the Matthews Asia Growth Fund returned 46.76% (Investor Class) and 47.01% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 20.07%. For the fourth quarter, the Fund returned 26.54% (Investor Class) and 26.64% (Institutional Class) versus 17.88% for the Index.


Market Environment:

Equities across Asia were volatile in the year, but broad market indexes tracking the region ultimately generated attractive returns. Global markets fell in the first quarter, as worries surrounding the spread of COVID-19 moved from China throughout Europe to the U.S. and then back to South Asia, including India. Fears of a global growth slowdown turned into reality as governments worldwide began to implement different versions of ‘shelter in place’ to contain the movement of the virus. Early in the year, cyclically sensitive sectors like energy, materials, industrials and financials suffered most while companies related to communication services and technology performed better. In the second quarter, most global financial markets, including Asia’s, began to rise as major economies began to relax prior pandemic-related restrictions. The gradual reopening of businesses—especially those focused on services and consumption— helped bolster sentiment and bring a floor to stock prices globally.

In the third quarter, economic recovery and improved sentiment began to take hold as major economies continued to relax COVID-19 lockdown restrictions even further. China’s V-shaped recovery in manufacturing along with a steady recovery in domestic consumption brought some normalcy to daily life. EM currencies rallied slightly against the U.S. dollar in the third quarter, acting as a slight tailwind for EM equities. Growth stocks outpaced value and small caps outperformed large caps in the third quarter. The fourth quarter saw further economic strengthening. Cyclical stocks in beaten-up or export-driven markets such as Indonesia and South Korea rallied most in the fourth quarter, while markets that experienced early recovery like China, Japan and India lagged slightly. Market strength gained momentum following the U.S. Presidential elections in November as markets hoped for less confrontational U.S. – China relations, combined with an announcement of several approved COVID-19 vaccines that were due for distribution early in 2021.


Performance Contributors and Detractors:

From a regional perspective, stock selection in China/Hong Kong was a notable contributor to performance. China’s economy went into lockdown and emerged from lockdown earlier than other major economies, boosting local sentiment and asset prices. From a sector perspective, stock selection and our overweight in health care was a notable contributor to performance. Health care stocks occupy an interesting spot in the risk-reward continuum in our view, because they offer the potential for both attractive growth and steady growth.

On the other hand, our underweight to Taiwan and South Korea detracted slightly from relative performance. Our underweight to the information technology sector was also a slight detractor from relative performance, even though stock selection in information technology was a contributor. Large-cap information technology companies, which have a strong presence in Taiwan and South Korea, generated strong gains in the year. The Fund’s underweights are result of our bottom-up stock selection process.

Turning to individual securities, the Chinese electric vehicle (EV) maker Xpeng, which we purchased during its IPO in the mid-August, generated strong gains in the reporting period. China continues to focus on cleaner energy and cleaner transit, fueling demand for EVs. On the other hand, the Chinese health care company Kangji Medical Holdings was a detractor. We exited the company in the fourth quarter to redeploy the capital in higher conviction holdings.

By market capitalization, stock selection among mid-cap stocks (those with a market cap between $3 billion and $10 billion) was also a strong contributor in the period. In our view, mid-cap stocks offer attractive alpha generation potential because they are often in an earlier stage of growth with a longer trajectory for generating future returns. The spirit of a growth-oriented fund is to capture this early stage growth when possible. While the Fund skews towards large caps in aggregate, we continue to find compelling opportunities in mid caps. On the other hand, stock selection in small caps was a detractor in the period. While the economic recovery is starting to broaden out and include smaller companies, investors gravitated toward larger companies with larger balance sheets amid a year of economic disruption. Small caps remains a focus of our research efforts, particularly in Japan.


Notable Portfolio Changes:

A robust IPO market in China led to a busy fourth quarter in terms of new portfolio additions. We purchased China-based health care companies Jacobio Pharmaceuticals Group, JD Health International, JW Cayman Therapeutics and Remegen Co. In addition, we purchased Chinese real estate management company Shimao Services and Chinese cosmetics company Yatsen Holding. The surge of IPOs created some interesting buying opportunities. Elsewhere in the region, we initiated a small position in the Indian non-banking financials company Bajaj Finance. And in Singapore, we initiated a position in Sea, Ltd.


Outlook:

Looking ahead, we expect China and Japan to remain compelling markets from a bottom-up perspective. U.S. – China trade tensions may linger to some degree, even as the incoming Biden administration appears likely to employ a more nuanced and diplomatic tone. For Japan, as the global economic outlook improves due to vaccine rollouts and lessening impacts of the pandemic, we expect the country’s macro conditions to improve as well. We especially see opportunities among small-cap names in Japan. In both markets, active security selection will remain key in our view. Turning to South and Southeast Asian economies such as India, the outlook is improving in many parts of the region and we continue to look for opportunities in these markets as well.

From a sector perspective, continued prospects for growth in the health care sector remains sound in our view, with attractive compounding potential for bottom-up equity investors. What’s more we find a broader universe of opportunity among health care companies. Whereas a sector such as communication services tends to be dominated by a few large players, we can more easily diversify our exposure within the health care sector because of the breadth and depth of the universe. Parts of the health care sector have seen a rise in valuations, but opportunities remain and we expect the sector to become a much larger part of the indexes and broader universe of stocks in Asia over time. From a bottom-up perspective, we are also finding opportunities in sectors such as real estate and information technology that have been less represented in the portfolio in the past. 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 its market share.

As of 12/31/2020, the securities mentioned comprised the Matthews Asia Growth Fund in the following percentages: XPeng, Inc. ADR, 2.2%; Jacobio Pharmaceuticals Group Co., Ltd., 0.7%; JD Health International, Inc., 1.4%; JW Cayman Therapeutics Co., Ltd., 0.4%; RemeGen Co., Ltd. H Shares, 0.8%.Shimao Services Holdings, Ltd., 1.2%; Yatsen Holding, Ltd. ADR, 0.9%; Bajaj Finance, Ltd., 1.0%; and Sea, Ltd. ADR, 0.9%. The fund held no positions in Kangji Medical Holdings. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MPACX as of 03/31/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
73.85% 12.95% 16.54% 10.49% 10.86% 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 1.09%

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.