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Asia Growth

Matthews Emerging Asia Fund MEASX

Snapshot

  • Highly-differentiated growth strategy seeks alpha in Asia’s rapidly developing frontier and emerging economies
  • Deep fundamental approach focuses on undiscovered companies in under-covered markets
  • Capitalizes on rising consumer wealth and domestic consumption
  • Uncorrelated mix of countries dampens portfolio volatility

04/30/2013

Inception Date

2.93%

YTD Return

(as of 01/15/2021)

$11.96

Price

(as of 01/15/2021)

$196.75 million

Fund Assets

(as of 12/31/2020)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Emerging Asia 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 excluding Japan, South Korea, Hong Kong and Singapore. The Fund may also invest in the convertible securities, of any duration or quality of companies located in Asia excluding Japan, South Korea, Hong Kong and Singapore. The Fund is expected to invest a substantial portion of its net assets in the emerging countries and markets in the Asian region, including but not limited to, Bangladesh, Cambodia, China (including Taiwan, but excluding Hong Kong), India, Indonesia, Laos, Malaysia, Mongolia, Myanmar, Pakistan, Papua New Guinea, Philippines, Sri Lanka, Thailand and Vietnam ("Emerging Asian Countries"). 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 04/30/2013
Fund Assets $196.75 million (12/31/2020)
Currency USD
Ticker MEASX
Cusip 577-125-883
Portfolio Turnover 18.77%
Benchmark MSCI Emerging Markets (EM) Asia Index
Geographic Focus Asia excluding Japan, South Korea, Hong Kong and Singapore - Consists of all emerging countries and markets in the Asian region, excluding Japan, South Korea, Hong Kong and Singapore
Fees & Expenses
Gross Expense Ratio 1.65%
Net Expense Ratio 1.42%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 12/31/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Emerging Asia Fund
MEASX
5.92% 19.17% -2.16% -2.16% -7.24% 2.43% n.a. 3.29% 04/30/2013
MSCI Emerging Markets (EM) Asia Index
7.10% 18.93% 28.77% 28.77% 9.34% 14.81% n.a. 9.03%
As of 12/31/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Emerging Asia Fund
MEASX
5.92% 19.17% -2.16% -2.16% -7.24% 2.43% n.a. 3.29% 04/30/2013
MSCI Emerging Markets (EM) Asia Index
7.10% 18.93% 28.77% 28.77% 9.34% 14.81% n.a. 9.03%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014
Matthews Emerging Asia Fund
MEASX
-2.16% -1.01% -17.58% 18.42% 19.25% -2.56% 17.39%
MSCI Emerging Markets (EM) Asia Index
28.77% 19.65% -15.16% 43.27% 6.53% -9.47% 5.27%

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 12/31/2020)

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

  • 1 YEAR
  • 3rd
  • 15 out of 19 funds
  • 3 YEAR
  • 4th
  • 19 out of 19 funds
  • 5 YEAR
  • 4th
  • 17 out of 17 funds
  • SINCE INCEPTION
  • 3rd
  • 6 out of 9 funds

Ratings agency calculation methodology

Portfolio Managers

Taizo  Ishida photo
Taizo Ishida

Lead Manager

Robert  Harvey, CFA photo
Robert Harvey, CFA

Lead Manager

Portfolio Characteristics

(as of 12/31/2020)
58
Number of Securities

Source: BNY Mellon Investment Servicing (US) Inc.

16.1x
P/E using FY1 estimates
13.8x
P/E using FY2 estimates
$8.5 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 12/31/2020)
Name Sector Country % Net Assets
Mobile World Investment Corp. Consumer Discretionary Vietnam 3.6
Bajaj Finance, Ltd. Financials India 3.6
Jollibee Foods Corp. Consumer Discretionary Philippines 3.5
Military Commercial Joint Stock Bank Financials Vietnam 3.5
Vinh Hoan Corp. Consumer Staples Vietnam 3.5
British American Tobacco Bangladesh Co., Ltd. Consumer Staples Bangladesh 3.3
John Keells Holdings PLC Industrials Sri Lanka 3.1
Phu Nhuan Jewelry JSC Consumer Discretionary Vietnam 3.0
Meezan Bank, Ltd. Financials Pakistan 3.0
PT Bank Mandiri Persero Financials Indonesia 2.7
TOTAL 32.8

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 12/31/2020)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Consumer Staples 26.7 5.2 21.5
Consumer Discretionary 24.1 20.5 3.6
Financials 21.3 14.7 6.6
Health Care 5.4 5.6 -0.2
Industrials 5.3 4.5 0.8
Real Estate 4.8 2.2 2.6
Materials 3.2 4.8 -1.6
Energy 3.0 3.1 -0.1
Information Technology 2.7 25.4 -22.7
Communication Services 0.0 12.4 -12.4
Utilities 0.0 1.7 -1.7
Cash and Other Assets, Less Liabilities 3.4 0.0 3.4

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

Country Fund Benchmark Difference
Vietnam 17.4 0.0 17.4
Indonesia 12.5 1.7 10.8
India 11.6 11.6 0.0
China/Hong Kong 10.9 49.0 -38.1
Bangladesh 10.9 0.0 10.9
Pakistan 10.8 0.0 10.8
Sri Lanka 8.4 0.0 8.4
Philippines 8.3 0.9 7.4
Thailand 2.5 2.3 0.2
Australia 2.2 0.0 2.2
Singapore 1.1 0.0 1.1
South Korea 0.0 16.8 -16.8
Taiwan 0.0 15.8 -15.8
Malaysia 0.0 1.9 -1.9
Cash and Other Assets, Less Liabilities 3.4 0.0 3.4

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 8.3 63.5 -55.2
Large Cap ($10B-$25B) 8.1 19.7 -11.6
Mid Cap ($3B-$10B) 18.1 15.1 3.0
Small Cap (under $3B) 62.1 1.7 60.4
Cash and Other Assets, Less Liabilities 3.4 0.0 3.4

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 $0.18802 $0.00000 $0.00000 $0.18802 1.6% N.A.
12/16/2019 12/17/2019 $0.00000 $0.00000 $0.29950 $0.29950 2.5% 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.

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For the quarter ending September 30, 2020, the Matthews Emerging Asia Fund returned 9.50% (Investor Class) and 9.55% (Institutional Class), while its benchmark, the MSCI Emerging Markets Asia Index, returned 12.07%.

Market Environment:

Equity markets in Bangladesh and Pakistan saw a strong rebound in the third quarter, following a tough start to the year. Investor sentiment strengthened on improving macroeconomic data, historically low equity price valuations and easing coronavirus fears. For Bangladesh and Pakistan, hopes for a V-shaped economic recovery are gaining momentum, and foreign exchange reserves are trending in a positive direction for both countries. Both Bangladesh and Pakistan continue to see strong remittances, in which family members living and working abroad send money home. While the number of new infections of coronavirus is rising in both Bangladesh and Pakistan, overall mortality rates have not gone up for either country. We see a similar trend in India, where infections are rising but overall mortality rates haven’t changed meaningfully. Youthful populations may partly explain the health resiliency of these countries amid the pandemic.

Equity markets in Indonesia were weak because the government had returned to extreme lockdowns related to the pandemic, which has been bad for the economy. Local investors in Indonesia have also generally been disappointed in president Joko Widodo’s handling of economic issues. Markets in Thailand were also weak amid political unrest related to an unpopular new king ascending to the throne. From a currency perspective, the Indian rupee, Pakistani rupee, Malaysian ringgit, and Philippine peso all appreciated relative to the U.S. dollar. In contrast, the Indonesian rupiah and Thai baht depreciated.

Performance Contributors and Detractors

A contributor to Fund performance during the quarter was British American Tobacco, a Bangladesh-based tobacco producer whose share price had previously been under pressure. In terms of tobacco sales, business as usual has resumed quickly in Bangladesh following the initial lockdowns related to the pandemic. The company’s earnings have improved recently and investor sentiment has gained strength. In addition, the company has launched a new business line exporting completed cigarettes to China. The cost of producing cigarettes in Bangladesh—both in terms of agriculture and labor—are lower than China, creating interesting export opportunities for the company. Elsewhere, Vietnamese fishery Vinh Hoan, was another contributor. The company produces and exports high-quality white fish fillets, mainly to the U.S. Improving sales numbers buoyed by premium products lifted the stock price.

Detractors included Thailand-based consumer discretionary company Central Retail and consumer staples company Thai Beverage. Their share prices declined amid broader negative local investor sentiment in Thailand but both companies remain stable businesses. Thailand is currently experiencing considerable political unrest related to their new king and military government, both of whom are unpopular among the country’s citizens. The market environment in Thailand has been very weak amid political demonstrations and unrest. Another detractor was Indonesian household goods producer Kino Indonesia amid poor investor sentiment toward Indonesian equities in the face of further lockdowns.

From a country perspective, stock selection in Pakistan and our overweight to Bangladesh and Vietnam contributed to relative performance. These markets experienced strong gains as their economies began to reopen. In contrast, our overweight to Indonesia and Thailand detracted from performance. Both markets were weak overall on political concerns.

Notable Portfolio Changes:

During the quarter, we added new positions in China, where there have been a number of new IPOs. We have historically been underweight China relative to the benchmark, and we expect to remain underweight looking ahead, as our focus remains on less developed markets within Asia. At the same time, we’ve added incrementally to our China holdings reflecting compelling bottom-up investment opportunities. For example, we initiated a new position in Xpeng, a Chinese electric vehicle (EV) maker with a strong focus on innovation and technology. China is a natural market for EVs in our view, as much of the rural parts of the country already use electric two wheelers. We also exited a few positions in the quarter among our microcap stocks, primarily on liquidity concerns.

Outlook:

Looking ahead, we expect many economies among less developed parts of Asia to begin to slowly return to normal. Interest among domestic investors in frontier equity markets picked up considerably in the quarter. As conditions on the ground have started to stabilize, we expect to see a corresponding recovery among equity prices in markets such as Pakistan, Vietnam and Bangladesh. Indonesia recently passed a new omnibus law, easing labor laws for employers and encouraging more foreign industrial investment. One country facing a potentially slower recovery is Sri Lanka, which faces twin deficits that include a current account deficit and budget deficit. The country is also quite dependent on tourism, which has dried up as global travel evaporated. On balance though, we remain optimistic about the long-term growth potential for less developed markets in Asia. Youthful workforces, rising consumption and attractive equity valuations make these markets very compelling to us on a long-term view.

As of 09/30/2020, the securities mentioned comprised the Matthews Emerging Asia Fund in the following percentages: British American Tobacco Bangladesh Co., Ltd., 3.7%; Vinh Hoan Corp., 4.7%; Central Retail Corp. Public Co., Ltd., 2.1%; Thai Beverage Public Co., Ltd., 2.2%; PT Kino Indonesia, 2.8%; XPeng, Inc. ADR, 2.1%. Current and future portfolio holdings are subject to change and risk.

Average Annual Total Returns - MEASX as of 12/31/2020
1YR 3YR 5YR 10YR Since Inception Inception Date
-2.16% -7.24% 2.43% N.A. 3.29% 04/30/2013

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 1.65%
Net Expense Ratio 1.42%

Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class (which is offered through a separate prospectus to eligible investors) to 1.20%, first by waiving class specific expenses (e.g., shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses (e.g., custody fees) of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 1.20% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 1.20%. If the operating expenses fall below the expense limitation in a year within three years after Matthews has made a waiver or reimbursement, the Fund may reimburse Matthews up to an amount that does not cause the expenses for that year to exceed the lesser of (i) the expense limitation applicable at the time of that fee waiver and/or expense reimbursement or (ii) the expense limitation in effect at the time of recoupment. This agreement will remain in place until April 30, 2021 and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date.

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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.