TOP
Asia Growth

Matthews Asia Innovators Fund MATFX

Snapshot
  • High-conviction, concentrated equity portfolio of innovative companies in Asia ex Japan
  • All-cap fundamental approach focused on companies with unique offerings that create or expand markets
  • Capitalizing on the new economy and the rising disposable income in Asia

12/27/1999

Inception Date

2.25%

YTD Return

(as of 06/17/2021)

$27.30

Price

(as of 06/17/2021)

$2.10 billion

Fund Assets

(as of 05/31/2021)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Asia Innovators 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 that Matthews believes are innovators in their products, services, processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets. 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. Sector funds may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific sector. The Fund's value may be affected by changes in the science and technology-related industries.

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

Fund Facts
Inception Date 12/27/1999
Fund Assets $2.10 billion (05/31/2021)
Currency USD
Ticker MATFX
Cusip 577-130-883
Portfolio Turnover 119.8%
Benchmark MSCI All Country Asia ex Japan 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 1.10%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • data_graph_selected Created with Sketch.
  • bar_graph_selected Created with Sketch.
As of 05/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund
MATFX
0.41% -5.77% 1.57% 71.93% 24.10% 24.11% 14.83% 6.99% 12/27/1999
MSCI All Country Asia ex Japan Index
1.23% 1.13% 6.61% 51.96% 10.77% 15.47% 7.10% 7.44%
As of 03/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund
MATFX
-7.89% -0.71% -0.71% 102.51% 23.36% 23.76% 14.69% 6.93% 12/27/1999
MSCI All Country Asia ex Japan Index
-2.52% 2.75% 2.75% 57.77% 9.20% 14.12% 6.96% 7.32%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews Asia Innovators Fund
MATFX
86.72% 29.60% -18.62% 52.88% -9.10% 4.48% 9.24% 35.61% 14.11% -17.26%
MSCI All Country Asia ex Japan Index
25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70% -17.07%

MSCI AC Asia Ex Japan Index since inception value calculated from 12/31/99.

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 56 funds
  • 3 YEAR
  • out of 56 funds
  • 5 YEAR
  • out of 50 funds
  • 10 YEAR
  • out of 29 funds
  • 1 YEAR
  • 1st
  • 2 out of 42 funds
  • 3 YEAR
  • 1st
  • 2 out of 41 funds
  • 5 YEAR
  • 1st
  • 6 out of 35 funds
  • 10 YEAR
  • 1st
  • 1 out of 24 funds
  • SINCE INCEPTION
  • 2nd
  • 7 out of 14 funds

Ratings agency calculation methodology

Portfolio Manager

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

Lead Manager

Portfolio Characteristics

(as of 03/31/2021)
35
Number of Securities

Source: BNY Mellon Investment Servicing (US) Inc.

29.7x
P/E using FY1 estimates
24.4x
P/E using FY2 estimates
$157.7 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 05/31/2021)
Name Sector Country % Net Assets
Sea, Ltd. Communication Services Singapore 6.0
HDFC Bank, Ltd. Financials India 5.6
Bilibili, Inc. Communication Services China/Hong Kong 5.6
Trip.com Group, Ltd. Consumer Discretionary China/Hong Kong 4.4
Wuxi Biologics Cayman, Inc. Health Care China/Hong Kong 4.3
Meituan Consumer Discretionary China/Hong Kong 4.1
Tencent Holdings, Ltd. Communication Services China/Hong Kong 4.0
ICICI Bank, Ltd. Financials India 4.0
AIA Group, Ltd. Financials China/Hong Kong 3.5
JD.com, Inc. Consumer Discretionary China/Hong Kong 3.5
TOTAL 45.0

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 03/31/2021)
  • 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)
12/15/2020 12/16/2020 $0.00000 $0.13545 $0.31069 $0.44614 1.8% 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, 2021

For the quarter ending March 31, 2021, the Matthews Asia Innovators Fund returned -0.71% (Investor Class) and -0.67% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 2.75%.

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. 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:

Stock selection in China was a detractor from performance. Sentiment was negative toward some Chinese growth stocks in the quarter amid regulatory pressures and ongoing U.S.-China trade tensions. While share prices among many Chinese growth stocks were weak in the quarter, many of those same stocks have been strong performers on a three-year basis. China is the largest country weight in the portfolio and we continue to see attractive growth potential in the Chinese markets from a bottom-up perspective. Elsewhere in the region, Indonesia remains a very small weight in the portfolio, but stock selection in Indonesia was a contributor to performance.

Among individual securities, TAL Education Group was a detractor. China’s government introduced a new regulatory framework governing the after-school education industry, attempting to prevent students who participate in these programs from studying too much and experiencing education burnout. At the same time, we continue to like the long-term prospects for the company and added to the position amid share price weakness. Chinese automation equipment manufacturer Leader Harmonious Drive Systems was another detractor in the quarter. We decided to exit the position and reallocate the capital to new opportunities.

Turning to contributors, core portfolio holdings such as Bilibili Inc. and Sea Ltd. continued to enjoy price gains in the quarter. Bilibili is a Chinese video content platform that caters to young viewers. The company 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. With a growing user base and distinctive value proposition for its users, we find the company to have attractive long-term prospects. Singapore based gaming and e-commerce company Sea Ltd. is one of the few Internet companies focused on serving customers in South and Southeast Asia with significant businesses in Singapore, Indonesia and Thailand that has achieved significant scale and market share.

Notable Portfolio Changes:

During the quarter, we initiated a new position in Zai Lab Ltd., a Chinese health care company focused on bringing innovative drugs into the Chinese market. As demand for innovative health care solutions in China has risen, the company’s research platform focused on treating cancer, autoimmune and infectious diseases presents attractive long-term growth potential. We also initiated a new position in Trip.com Group, an online travel booking company domiciled in Shanghai. Domestic travel in China is on the rise, as China’s economy was the first major economy to re-open following lockdowns. And we also expect global travel to eventually normalize over the long term. Amid volatility in the Chinese markets, we were able to purchase the stock at an attractive valuation. Positions that we exited in the quarter include Chinese liquor company Wuliangye Yibin.

Outlook:

Following a healthy correction in parts of Asia’s equity markets, particularly China, valuations for innovative companies are looking particularly attractive in our view. We tend to look at valuations from many angles, such as in relation to a company’s own historical averages, as well as in relation to a company’s global industry peers and counterparts. On both fronts, we find many innovative companies in Asia at appealing levels today. As valuations were elevated in 2020, current levels provide a fertile hunting ground for companies that are innovating in areas such as business strategy, business models, products and services, marketing and human capital.

Meanwhile, economic fundamentals across much of Asia are improving. In many parts of the region, we see a return to normalcy, leading to better economic prospects for businesses. Parts of Asia have progressed from recovery to expansion. China has seen a very strong V-shaped recovery and remains poised for continued growth. In our view, there has been a disconnect between Chinese equity prices, which were down in the quarter, and China’s long-term economic prospects, which we believe remain bright. Looking ahead, earnings growth, liquidity and valuations all appear supportive of Asia’s equity markets. We expect strong corporate earnings across Asia in 2021 as the global recovery continues to expand.

 

As of 3/31/21, the securities mentioned comprised the Matthews Asia Innovators Fund in the following percentages: TAL Education Group ADR, 3.9%; Bilibili, Inc. ADR, 7.2%; Sea, Ltd. ADR, 5.4%; Zai Lab, Ltd. ADR, 1.5%; Trip.com Group, Ltd. ADR, 4.0%. The Fund held no positions in Leader Harmonious Drive Systems and Wuliangye Yibin. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MATFX as of 03/31/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
102.51% 23.36% 23.76% 14.69% 6.93% 12/27/1999

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 1.10%

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. Sector funds may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific sector. The Fund's value may be affected by changes in the science and technology-related industries.

 

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.