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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

-26.14%

YTD Return

(as of 05/20/2022)

$13.93

Price

(as of 05/20/2022)

$731.80 million

Fund Assets

(as of 04/30/2022)

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.

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

Fund Facts
Inception Date 12/27/1999
Fund Assets $731.80 million (04/30/2022)
Currency USD
Ticker MATFX
Cusip 577-130-883
Portfolio Turnover 220.5%
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 1.09%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 04/30/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund
MATFX
-4.38% -18.10% -22.48% -33.41% 11.22% 11.42% 11.38% 4.75% 12/27/1999
MSCI All Country Asia ex Japan Index
-5.16% -9.91% -12.70% -20.80% 2.95% 5.47% 5.49% 5.96%
As of 03/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund
MATFX
-8.66% -18.93% -18.93% -29.05% 13.32% 13.11% 11.57% 4.98% 12/27/1999
MSCI All Country Asia ex Japan Index
-2.74% -7.95% -7.95% -14.42% 5.44% 7.05% 6.05% 6.23%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Asia Innovators Fund
MATFX
-13.10% 86.72% 29.60% -18.62% 52.88% -9.10% 4.48% 9.24% 35.61% 14.11%
MSCI All Country Asia ex Japan Index
-4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70%

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 03/31/2022)

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 52 funds
  • 3 YEAR
  • out of 52 funds
  • 5 YEAR
  • out of 46 funds
  • 10 YEAR
  • out of 34 funds
  • 1 YEAR
  • 4th
  • 29 out of 33 funds
  • 3 YEAR
  • 1st
  • 2 out of 33 funds
  • 5 YEAR
  • 1st
  • 2 out of 28 funds
  • 10 YEAR
  • 1st
  • 1 out of 19 funds
  • SINCE INCEPTION
  • 3rd
  • 8 out of 10 funds

Ratings agency calculation methodology

Portfolio Managers

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

Lead Manager

Taizo  Ishida photo
Taizo Ishida

Co-Manager

Portfolio Characteristics

(as of 03/31/2022)
Fund Benchmark
Number of Positions 38 1,220
Weighted Average Market Cap $115.8 billion $130.7 billion
Active Share 78.6 n.a.
P/E using FY1 estimates 25.9x 12.4x
P/E using FY2 estimates 19.9x 11.1x
Price/Cash Flow 17.8 7.9
Price/Book 3.4 1.7
Return On Equity 9.3 15.0
EPS Growth (3 Yr) 15.6% 13.4%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 03/31/2022)
7.72%
Alpha
1.16
Beta
128.67%
Upside Capture
94.87%
Downside Capture
0.54
Sharpe Ratio
0.65
Information Ratio
12.14%
Tracking Error
74.37

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 04/30/2022)
Name Sector Country % Net Assets
ICICI Bank, Ltd. Financials India 7.0
Tencent Holdings, Ltd. Communication Services China/Hong Kong 6.7
JD.com, Inc. Consumer Discretionary China/Hong Kong 5.3
Meituan Consumer Discretionary China/Hong Kong 5.1
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 5.0
Reliance Industries, Ltd. Energy India 4.1
XPeng, Inc. Consumer Discretionary China/Hong Kong 3.7
Trip.com Group, Ltd. Consumer Discretionary China/Hong Kong 3.6
HDFC Bank, Ltd. Financials India 3.5
Huazhu Group, Ltd. Consumer Discretionary China/Hong Kong 3.4
TOTAL 47.4

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 $1.10849 $3.22827 $4.33676 18.5% 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 Innovators Fund returned -18.93% (Investor Class) and -18.92% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned -7.95% over the same period.

Market Environment:

The first quarter of 2022 was broadly negative and choppy for Asian equity markets for the third consecutive quarter, led down by Chinese internet names which remained under regulatory pressure. Economic headwinds hurt risk assets globally as surging commodity prices and higher inflation introduced rhetoric of slowing global growth and prospects of stagflation. The U.S. Federal Reserve hiked rates for the first time since 2018 and signaled toward further tightening ahead. In addition, by mid-February, markets were laser focused on the fallout and implications of Russia’s unilateral, unprovoked invasion of the Ukraine.

Growth names lagged significantly behind value names across Asia, especially in Japan, as innovative companies continue to navigate supply-chain bottle necks and a less growth-conducive macro environments. These challenges serve as a reminder of the importance of holding a long-term view in Asia and the emerging markets.

Performance Contributors and Detractors:

From a regional perspective, the Fund’s overweight and stock selection in China/Hong Kong detracted the most from performance as investors sold down holdings amid concerns over China’s regulatory interventions.  On the other hand, the Fund’s overweight to Vietnam and India contributed to relative performance.

From a sector perspective, health care, communication services and consumer discretionary detracted the most from relative performance. Consumer discretionary is our biggest sector allocation—it’s where we believe innovation can flourish and where China’s regulatory moves have also hit hard. Conversely, stock selection in real estate was the top contributor to performance. While we remain interested in the real estate sector, we’re mindful that it is now highly regulated and companies in the sector don’t have complete control over their destinies. 

Looking at our holdings, some of our consumer discretionary stocks detracted the most from both absolute and relative performance. In the consumer discretionary sector, 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 has seen an increase in sales and is posting impressive delivery numbers. We believe XPeng is a fundamentally sound business that has been hurt by negative market sentiment. In the communications services sector, Bilibili, Inc., a Chinese video content company, was one of the biggest detractors. The company’s operational metrics from user acquisition and engagement still trend positively but China’s policies to regulate the health and development of the country’s internet industry continue to put pressure on names in the sector. While we are cautious about the ongoing regulations, we continue to hold Bilibili as the fundamentals of the company remain healthy and its position as one of the dominant players in its field has strengthened as a result of more regulatory scrutiny.

On the other hand, Reliance Industries was one of the biggest contributors to performance over the quarter. Reliance Industries is an Indian multinational company that has diversified businesses including energy, petrochemicals, natural gas, retail, telecommunications, mass media and textiles. Not only did Reliance profit from increasing commodity prices, it also benefited from a joint venture to create a world-class electronic manufacturing hub, strengthening the new economy in India.

Notable Portfolio Changes:

During the quarter, we initiated a position in Trip.com, a Chinese online travel company that provides services including accommodation reservation, transportation ticketing, packaged tours and corporate travel management. We believe Trip.com is well positioned to benefit from the global re-opening and increased tourism. Additionally, we continue to increase our exposure to Southeast Asian countries, initiating positions in Bank Mandiri Persero TBK and Bank of the Philippine Islands, large commercial banks providing digital banking services in Indonesia and the Philippines, respectively.

Outlook:

Concerns over China’s regulatory environment may continue to cause more volatility in the region. We continue to monitor the situation very closely, though the valuation of Chinese internet companies looks very attractive currently despite these risks and we will continue to build positions in companies that we believe are well positioned to grow and benefit from consumption growth. Despite all the challenges, we are also 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 excited to see significant developments in countries like India, South Korea, Indonesia and other Southeast Asian countries as well. We continue to find many innovative companies in Asia at appealing levels today and the current levels continue to provide fertile hunting ground for companies that are innovating in areas such as business strategy, products and services, marketing and human capital.

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 - MATFX as of 03/31/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-29.05% 13.32% 13.11% 11.57% 4.98% 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 1.09%

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. 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.