Overall Morningstar RatingTM (As of 03/31/2022)
Based on risk-adjusted return among 20 funds in the India Equity Category
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
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.
These and other risks associated with investing in the Fund can be found in the
prospectus.
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
Performance
Monthly
Quarterly
Calendar Year
As of 05/31/2022
Average Annual Total Returns
Name
1MO
3MO
YTD
1YR
3YR
5YR
10YR
Since Inception
Inception Date
Matthews India Fund
MINDX
-3.85%
-4.50%
-10.33%
-2.92%
5.58%
4.41%
11.03%
9.90%
10/31/2005
S&P Bombay Stock Exchange 100 Index
-4.87%
-3.11%
-7.45%
1.14%
9.39%
8.61%
11.07%
10.30%
As of 03/31/2022
Average Annual Total Returns
Name
1MO
3MO
YTD
1YR
3YR
5YR
10YR
Since Inception
Inception Date
Matthews India Fund
MINDX
1.06%
-5.11%
-5.11%
8.88%
7.03%
6.11%
9.92%
10.38%
10/31/2005
S&P Bombay Stock Exchange 100 Index
3.53%
-1.10%
-1.10%
16.28%
12.48%
11.19%
9.91%
10.86%
For the years ended December 31st
Name
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Matthews India Fund
MINDX
18.11%
16.45%
-0.88%
-10.09%
35.79%
-1.23%
0.90%
63.71%
-5.90%
31.54%
S&P Bombay Stock Exchange 100 Index
24.08%
13.92%
8.53%
-6.00%
41.88%
2.32%
-6.41%
31.40%
-4.70%
28.62%
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.
Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.
The Overall Morningstar® Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.
Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
Lipper Analytical Services, Inc., rankings are based on total return, including reinvestment of dividends and capital gains for the stated periods. Funds are assigned a rank within a universe of funds similar in investment objective as determined by Lipper. For the absolute rankings shown the lower the number rank, the better the Fund performed compared to other funds in the classification group. Lipper also calculates a quartile ranking which divides the peer group into quartiles to identify funds of similar quality. Funds in the 1st or 2nd quartile had outperformed the average fund in the peer group while funds in the 3rd or 4th quartile had underperformed.
Peeyush Mittal is a Portfolio Manager at Matthews Asia and manages the firm's India Strategy. Prior to joining the firm in 2015, he spent over three years at Franklin Templeton Asset Management India, most recently as a Senior Research Analyst. Previously, he was with Deutsche Asset & Wealth Management New York, from 2009 to 2011, researching U.S. and European stocks in the industrials and materials sectors. Peeyush began his career in 2003 with Scot Forge as an Industrial Engineer, and was responsible for implementing Lean Manufacturing systems on the production shop floor. Peeyush earned his M.B.A from The University of Chicago Booth School of Business. He received a Master of Science in Industrial Engineering from The Ohio State University and received a Bachelor of Technology in Metallurgical Engineering from The Indian Institute of Technology Madras. He is fluent in Hindi.
Sharat Shroff is a Portfolio Manager at Matthews Asia and manages the firm’s Pacific Tiger Strategy and co-manages the India Strategy. Prior to joining Matthews Asia in 2005, Sharat worked in the San Francisco and Hong Kong offices of Morgan Stanley as an Equity Research Associate. Sharat received a Bachelor of Technology from the Institute of Technology in Varanasi, India and an MBA from the Indian Institute of Management, in Calcutta, India. He is fluent in Hindi and Bengali.
Portfolio Characteristics
(as of 03/31/2022)
Fund
Benchmark
Number of Positions
53
101
Weighted Average Market Cap
$58.5 billion
$70.6 billion
Active Share
46.2
n.a.
P/E using FY1 estimates
29.5x
23.7x
P/E using FY2 estimates
23.0x
20.3x
Price/Cash Flow
n.a.
16.8
Price/Book
4.0
3.6
Return On Equity
15.5
15.3
EPS Growth (3 Yr)
11.7%
2.5%
Sources: Factset Research Systems, Inc.
Risk Metrics (3 Yr Return)
(as of 03/31/2022)
Category
3YR Return Metric
Alpha
-4.49%
Beta
0.99
Upside Capture
75.66%
Downside Capture
94.07%
Sharpe Ratio
0.26
Information Ratio
-0.89
Tracking Error
6.12%
R²
93.78
-4.49%
Alpha
0.99
Beta
75.66%
Upside Capture
94.07%
Downside Capture
0.26
Sharpe Ratio
-0.89
Information Ratio
6.12%
Tracking Error
93.78
R²
Fund Risk Metrics are reflective of Investor share class.
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
Market Cap Exposure
Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.
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.
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.
For the first quarter of the year, the Fund returned -5.11% (Investor Class) and -5.10% (Institutional Class), while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned -1.10% over the same period.
Market Environment:
India is enduring an acceleration of headwinds most notably related to rising global inflation and the U.S. Federal Reserve’s monetary tightening in response to it. So far India’s central bank has maintained its accommodative policy but we anticipate that will have to change. With China’s COVID lockdowns continuing to impact supply chains, inflation for now seems to be on the front foot. More directly for a major energy importer like India, the surge in oil prices resulting from Russia’s invasion of Ukraine, is a material negative. Higher energy prices feed into higher inflation which in turn creates a drag on consumption and growth.
While the environment is challenging, India has two positives in its favor. One is the recovery in its banking sector, which is now well capitalized to deal with any adverse credit issues. The other is the fast growth of high-value items like engineering goods within India’s exports. This is helping India to diversify away from services and commodities exports and counter current account-deficit pressures from the high oil-price environment.
Performance Contributors and Detractors:
The portfolio’s lack of exposure to utilities and underweight in energy and materials sectors were among the biggest detractors to relative performance. We have historically not focused on these sectors given our growth-orientated strategy and all three areas benefited from the upswing in commodity prices.
Our allocation and stock selection within health care also detracted from performance. More specifically, Neuland Laboratories Limited, a small-cap active pharmaceutical ingredient (API) manufacturer, declined the most, leading to a drag experienced in the sector. The company’s customers are generally small biotech firms. Neuland’s clients destocked inventory last year, leading to slower-than-expected growth for the company. Further, high inflation in certain chemicals has meant pressure on gross margins for Neuland. We expect both of these headwinds to be transitory and still view Neuland as a fundamentally sound business.
On the other hand, the financials sector contributed the most to the portfolio’s relative performance and our stock selection within financials partly offset the negative attribution from other sectors. Specifically, Cholamandalam Investment and Finance was one of the biggest contributors to Fund performance. Cholamandalam is part of Murugappa Group which has a reputation for strong corporate governance. Earlier this year, the Group disclosed a strategy to diversify Cholamandalam’s lending business into newer verticals. Cholamandalam also disclosed a plan to acquire a payments player, indicating an intent to become more of a digital/fintech lender—both of these announcements were received well by the market.
Notable Portfolio Changes:
During the quarter, we reduced our holdings in information technology. Companies in the IT sector were generally insulated from supply chain challenges faced by other sectors. Revenue growth has been robust in the sector amid mass adoption of digital services and valuations have substantially moved past long-term averages, particularly among mid-caps. We believe accelerated monetary policy tightening is going to have a negative impact on technology spend globally and this in turn makes risk-reward less enticing in IT. Positions we closed in the quarter included Mindtree Ltd., an IT and consulting company, and IndiaMART InterMESH Ltd., an e-commerce platform.
After spending the past couple of years replenishing provisions to withstand credit quality issues emanating from COVID-related disruption to businesses and retail borrowers, we think the underlying profitability of the financial services sector is set to emerge. Given current valuations, we think risk-reward is highly favorable in the sector. Consequently, we added to our holdings in Bandhan Bank and Axis Bank.
Outlook:
Higher oil prices will mean inflation is going to edge up in India and this could lead to a worse than anticipated current account shortfall. Historically, such an environment has led to heightened rupee volatility. We don’t expect that to happen this time as India has adequate foreign reserves to meet external payments and inflation is more of a global issue compared to being more India specific in the past. However, the Reserve Bank of India is behind the monetary policy-normalization policies of other major emerging markets, including Brazil and Mexico, and we expect the central bank to begin to tighten. As a result, we think cost of capital in India is going to move higher in the coming 12 months which doesn’t bode well for equity valuations.
Amid macro headwinds, we remain confident in the opportunities that exist among Indian corporates. We think capital goods and the industrials sector will see a significant uptick in activity in the coming 12 months, driven by a recovery in government infrastructure spending and private capital expenditure. We also see an improving outlook for manufactured exports from India.
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 - MINDX as of 03/31/2022
1YR
3YR
5YR
10YR
Since Inception
Inception Date
8.88%
7.03%
6.11%
9.92%
10.38%
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
1.10%
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 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 Markit iBoxx Asian Local Bond Index tracks the total return performance of a bond portfolio consisting of local-currency denominated, high quality and liquid bonds in Asia ex-Japan. The Markit iBoxx Asian Local Bond Index includes bonds from the following countries: China (on- and offshore markets), Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.
The J.P. Morgan Asia Credit Index (JACI) tracks the total return performance of the Asia fixed-rate dollar bond market. JACI is a market cap-weighted index comprising sovereign, quasi-sovereign and corporate bonds and is partitioned by country, sector and credit rating. JACI includes bonds from the following countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand.
The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI All Country Asia Pacific Index is a free float–adjusted market capitalization–weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Index is a free float-adjusted market capitalization-weighted index of Chinese equities that includes H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges, Hong Kong-listed securities known as Red chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China) and foreign listings (e.g. ADRs).
The MSCI China All Shares Index captures large and mid-cap representation across China A shares, B shares, H shares, Red chips (issued by entities owned by national or local governments in China), P chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g. ADRs). The index aims to reflect the opportunity set of China share classes listed in Hong Kong,Shanghai, Shenzhen and outside of China.
The MSCI Emerging Markets (EM) Asia Index is a free float-adjusted market capitalization weighted index of the stock markets of China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Taiwan and Thailand. The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Small Cap Index is a free float-adjusted market capitalization weighted small cap index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungry, India, Indonesia, Kuwait, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan Thailand, Turkey and United Arab Emirates.
The S&P Bombay Stock Exchange 100 (S&P BSE 100) Index is a free float–adjusted market capitalization–weighted index of 100 stocks listed on the Bombay Stock Exchange.
The MSCI Japan Index is a free float–adjusted market capitalization–weighted index of Japanese equities listed in Japan.
The Korea Composite Stock Price Index (KOSPI) is a market capitalization–weighted index of all common stocks listed on the Korea Stock Exchange.
The MSCI All Country Asia ex Japan Small Cap Index is a free float–adjusted market capitalization–weighted small cap index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Small Cap Index is a free float-adjusted market capitalization-weighted small cap index of the Chinese equity securities markets, including H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges,Hong Kong-listed securities known as Red Chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs).
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.
Commentary
Period ended March 31, 2022
For the first quarter of the year, the Fund returned -5.11% (Investor Class) and -5.10% (Institutional Class), while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned -1.10% over the same period.
Market Environment:
India is enduring an acceleration of headwinds most notably related to rising global inflation and the U.S. Federal Reserve’s monetary tightening in response to it. So far India’s central bank has maintained its accommodative policy but we anticipate that will have to change. With China’s COVID lockdowns continuing to impact supply chains, inflation for now seems to be on the front foot. More directly for a major energy importer like India, the surge in oil prices resulting from Russia’s invasion of Ukraine, is a material negative. Higher energy prices feed into higher inflation which in turn creates a drag on consumption and growth.
While the environment is challenging, India has two positives in its favor. One is the recovery in its banking sector, which is now well capitalized to deal with any adverse credit issues. The other is the fast growth of high-value items like engineering goods within India’s exports. This is helping India to diversify away from services and commodities exports and counter current account-deficit pressures from the high oil-price environment.
Performance Contributors and Detractors:
The portfolio’s lack of exposure to utilities and underweight in energy and materials sectors were among the biggest detractors to relative performance. We have historically not focused on these sectors given our growth-orientated strategy and all three areas benefited from the upswing in commodity prices.
Our allocation and stock selection within health care also detracted from performance. More specifically, Neuland Laboratories Limited, a small-cap active pharmaceutical ingredient (API) manufacturer, declined the most, leading to a drag experienced in the sector. The company’s customers are generally small biotech firms. Neuland’s clients destocked inventory last year, leading to slower-than-expected growth for the company. Further, high inflation in certain chemicals has meant pressure on gross margins for Neuland. We expect both of these headwinds to be transitory and still view Neuland as a fundamentally sound business.
On the other hand, the financials sector contributed the most to the portfolio’s relative performance and our stock selection within financials partly offset the negative attribution from other sectors. Specifically, Cholamandalam Investment and Finance was one of the biggest contributors to Fund performance. Cholamandalam is part of Murugappa Group which has a reputation for strong corporate governance. Earlier this year, the Group disclosed a strategy to diversify Cholamandalam’s lending business into newer verticals. Cholamandalam also disclosed a plan to acquire a payments player, indicating an intent to become more of a digital/fintech lender—both of these announcements were received well by the market.
Notable Portfolio Changes:
During the quarter, we reduced our holdings in information technology. Companies in the IT sector were generally insulated from supply chain challenges faced by other sectors. Revenue growth has been robust in the sector amid mass adoption of digital services and valuations have substantially moved past long-term averages, particularly among mid-caps. We believe accelerated monetary policy tightening is going to have a negative impact on technology spend globally and this in turn makes risk-reward less enticing in IT. Positions we closed in the quarter included Mindtree Ltd., an IT and consulting company, and IndiaMART InterMESH Ltd., an e-commerce platform.
After spending the past couple of years replenishing provisions to withstand credit quality issues emanating from COVID-related disruption to businesses and retail borrowers, we think the underlying profitability of the financial services sector is set to emerge. Given current valuations, we think risk-reward is highly favorable in the sector. Consequently, we added to our holdings in Bandhan Bank and Axis Bank.
Outlook:
Higher oil prices will mean inflation is going to edge up in India and this could lead to a worse than anticipated current account shortfall. Historically, such an environment has led to heightened rupee volatility. We don’t expect that to happen this time as India has adequate foreign reserves to meet external payments and inflation is more of a global issue compared to being more India specific in the past. However, the Reserve Bank of India is behind the monetary policy-normalization policies of other major emerging markets, including Brazil and Mexico, and we expect the central bank to begin to tighten. As a result, we think cost of capital in India is going to move higher in the coming 12 months which doesn’t bode well for equity valuations.
Amid macro headwinds, we remain confident in the opportunities that exist among Indian corporates. We think capital goods and the industrials sector will see a significant uptick in activity in the coming 12 months, driven by a recovery in government infrastructure spending and private capital expenditure. We also see an improving outlook for manufactured exports from India.
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 - MINDX as of 03/31/2022
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
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.