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Asia Growth

Matthews India Fund MINDX

Snapshot
  • Unconstrained all-cap strategy focused on companies with a sustainable competitive edge and pricing power, which are able to perform throughout economic cycles
  • Fundamental bottom-up approach to seek well-run entrepreneurial companies with sustainable organic growth and trustworthy managements
  • Bias toward businesses that cater to rising domestic consumer demand and to policy-independent sectors

10/31/2005

Inception Date

2.66%

YTD Return

(as of 05/14/2021)

$26.99

Price

(as of 05/14/2021)

$700.52 million

Fund Assets

(as of 04/30/2021)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews India Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in publicly traded common stocks, preferred stocks and convertible securities of companies located in India. 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 markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

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

Fund Facts
Inception Date 10/31/2005
Fund Assets $700.52 million (04/30/2021)
Currency USD
Ticker MINDX
Cusip 577-130-859
Portfolio Turnover 57.4%
Benchmark S&P Bombay Stock Exchange 100 Index
Geographic Focus India
Fees & Expenses
Gross Expense Ratio 1.15%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 04/30/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund
MINDX
-1.15% 5.28% 1.75% 56.11% 1.50% 7.58% 6.84% 10.34% 10/31/2005
S&P Bombay Stock Exchange 100 Index
-1.30% 6.17% 4.16% 53.33% 7.57% 12.26% 5.84% 10.37%
As of 03/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund
MINDX
0.67% 2.93% 2.93% 77.51% 3.13% 8.34% 6.98% 10.48% 10/31/2005
S&P Bombay Stock Exchange 100 Index
2.04% 5.54% 5.54% 78.72% 9.40% 12.85% 5.96% 10.52%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews India Fund
MINDX
16.45% -0.88% -10.09% 35.79% -1.23% 0.90% 63.71% -5.90% 31.54% -36.48%
S&P Bombay Stock Exchange 100 Index
13.92% 8.53% -6.00% 41.88% 2.32% -6.41% 31.40% -4.70% 28.62% -36.66%

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 19 funds
  • 3 YEAR
  • out of 19 funds
  • 5 YEAR
  • out of 18 funds
  • 10 YEAR
  • out of 12 funds
  • 1 YEAR
  • 2nd
  • 10 out of 22 funds
  • 3 YEAR
  • 4th
  • 17 out of 19 funds
  • 5 YEAR
  • 4th
  • 17 out of 18 funds
  • 10 YEAR
  • 2nd
  • 5 out of 12 funds
  • SINCE INCEPTION
  • n.a.
  • 1 out of 2 funds

Ratings agency calculation methodology

Portfolio Managers

Peeyush  Mittal, CFA photo
Peeyush Mittal, CFA

Lead Manager

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Co-Manager

Portfolio Characteristics

(as of 03/31/2021)
61
Number of Securities

Source: BNY Mellon Investment Servicing (US) Inc.

30.4x
P/E using FY1 estimates
24.0x
P/E using FY2 estimates
$48.5 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 04/30/2021)
Name Sector % Net Assets
Reliance Industries, Ltd. Energy 8.1
HDFC Bank, Ltd. Financials 7.9
Infosys, Ltd. Information Technology 6.1
ICICI Bank, Ltd. Financials 5.3
Info Edge India, Ltd. Communication Services 4.1
Housing Development Finance Corp., Ltd. Financials 3.8
Tata Consultancy Services, Ltd. Information Technology 3.6
Kotak Mahindra Bank, Ltd. Financials 3.3
Shriram City Union Finance, Ltd. Financials 3.0
Zydus Wellness, Ltd. Consumer Staples 2.5
TOTAL 47.7

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
  • Market Cap Exposure
Sector Fund Benchmark Difference
Financials 36.8 34.7 2.1
Information Technology 16.9 14.4 2.5
Consumer Staples 11.5 9.5 2.0
Energy 8.1 11.0 -2.9
Consumer Discretionary 7.7 7.5 0.2
Health Care 7.5 4.3 3.2
Industrials 5.2 4.6 0.6
Communication Services 4.7 2.7 2.0
Materials 3.3 8.4 -5.1
Utilities 0.0 2.7 -2.7
Real Estate 0.0 0.2 -0.2
Liabilities in Excess of Cash and Other Assets -1.5 0.0 -1.5

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 51.9 65.8 -13.9
Large Cap ($10B-$25B) 8.0 19.5 -11.5
Mid Cap ($3B-$10B) 18.9 14.0 4.9
Small Cap (under $3B) 22.7 0.6 22.1
Liabilities in Excess of Cash and Other Assets -1.5 0.0 -1.5

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 $0.17084 $0.62672 $0.79756 3.1% 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 India Fund returned 2.93% (Investor class) and 2.93% (Institutional class) while its benchmark, the S&P Bombay Stock Exchange 100 Index returned 5.54%.

Market Environment:

Indian equities were a regional bright spot in the first quarter. The central government released a pro-growth budget that helped create a favorable environment for equity investing, along with an accommodative monetary policy from the central bank. Demand in smaller cities and rural India remained strong given good cash flows on back of higher agricultural output aided by two consecutive favorable monsoons. The lowest interest rates in the past 10 years is also helping to revive the real estate market, which in turn is helping to improve the overall construction industry in the country. Headwinds in the form of inflationary pressure is appearing from elevated oil prices and other hard commodities but the potential impact on inflation is expected to be short-lived. Cyclical sectors like industrials and materials lead the markets, while health care, communication services and consumer names lagged. Foreign inflows continued to support Indian equities in the quarter, culminating in six months of consecutive inflows. Large caps lagged small and mid caps and earnings expectations continue to climb, supporting higher than normal equity valuations.

Performance Contributors and Detractors:

Detractors from performance included Info Edge and Bandhan Bank. Info Edge is the holding company for many online only platform businesses like Naukri.com, the largest job classifieds portal in the country. Info Edge is a technology company, and much like the rest of the world technology stocks have underperformed in the reporting period as bond yields rose on the U.S. 10-year Treasury. We continue to like Info Edge and expect the stock to continue to do well given the rapid adoption of internet happening in the country. Bandhan Bank is a universal bank based in eastern India. West Bengal and Assam—two of Bandhan Bank’s largest states in terms of credit book contributors—are going through state elections during which politicians typically make false promises related to loan waivers. Such false promises have negatively impacted credit collections for the bank in the last two quarters. We believe these issues are temporary in nature and once elections are over, we expect collections to normalize.

Contributors to performance included Neuland Laboratories and Poly Medicure. Neuland Laboratories is a small cap active pharmaceutical ingredient (API) manufacturing company. Aside from manufacturing generic drug API, the company has been investing in scaling its Contract Manufacturing (CMO) services directed at manufacturing innovator drugs. Given the shift in sourcing seen from China, Indian API manufacturers like Neuland Laboratories are benefiting from increased inquires and orders. Poly Medicure is a manufacturer of health care consumables and devices, and is the only listed player of its kind in India. Given the government’s focus on ”Make In India,” Poly Medicure is expected to benefit, as  most medical devices and consumables in India are either imported or manufactured by multinational corporations.

Notable Portfolio Changes:

We initiated a few new positions in the quarter. Thyrocare Technologies is a medical diagnostics business. We think diagnostics in India is benefiting from two large trends: greater awareness of health and wellness and industry consolidation in favor of more organized and larger players. We believe the greater spend on proactive diagnostics and the consolidation should benefit Thyrocare Technologies. Indiamart is another new position which is online platform focused on enabling B2B ecommerce. Indiamart is the largest player in this space and we think the longer the COVID related disruption, more adoption of B2B ecommerce that is likely to happen should be beneificial for Indiamart. In terms of exits, we sold out of Affle India Limited. Affle India Limited is an ad-tech business focused on enabling mobile advertising in the country. While we continue to like Affle India as a business, valuations became unreasonable making the risk reward adverse from our perspective.

Outlook:

Near-term outlook for India’s economic improvement seems to have taken a big hit given the resurgence of COVID in the country. The new case load has already exceeded previous daily highs, and is expected to climb close to 250,000 cases per day in the near term. States like Maharashtra and Delhi are the worst impacted. Local governments have announced measures to slow down the spread of the virus which are also likely to have a negative impact on the overall economic activity in these states. We expect to see similar restrictions being announced in other states too in the near future.

At the same time, our outlook for medium to long-term economic recovery continues to improve. The full year 2022 budget announced by India’s central government increases infrastructure investment by an unprecedented 34%, directed at improving the road and railway transportation in the country. Together with lower interest rates reviving real estate, we expect construction activity will grow over the next three years, leading to large job creation at the bottom of the pyramid. Private capital expenditure typically follows government capital expenditure. Given the prevailing negative real rates currently, we expect to see improvement in private capital expenditure after a long lull. The central government continues to focus on its “Make In India” initiative, which is leading to local sourcing of previously imported parts and products. This sets up the potential for new manufacturing capabilities in the country. We believe these efforts will help create more jobs and, in turn, drive economic improvement over the mid to long term.

 

As of 03/31/21, the securities mentioned comprised the Matthews India Fund in the following percentages: Info Edge India, Ltd., 3.6%; Bandhan Bank, Ltd., 2.7%; Neuland Laboratories, Ltd., 1.4%; Poly Medicure, Ltd., 1.3%; Thyrocare Technologies, Ltd., 0.4%; and IndiaMart InterMesh, Ltd., 0.6%. The Fund held no positions in Affle India Limited. Current and future portfolio holdings are subject to change and risk.

Average Annual Total Returns - MINDX as of 03/31/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
77.51% 3.13% 8.34% 6.98% 10.48% 10/31/2005

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 1.15%

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 markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

 

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.