10/31/2005
Inception Date
16.39%
YTD Return
(as of 11/30/2021)
$30.60
Price
(as of 11/30/2021)
$807.92 million
Fund Assets
(as of 10/31/2021)
Long-term capital appreciation
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.
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.
| Inception Date | 10/31/2005 | |
| Fund Assets | $807.92 million (10/31/2021) | |
| Currency | USD | |
| Ticker | MINDX | |
| Cusip | 577-130-859 | |
| Portfolio Turnover | 57.4% | |
| Benchmark | S&P Bombay Stock Exchange 100 Index | |
| Geographic Focus | India | |
| Gross Expense Ratio | 1.15% | |
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
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.
(as of 09/30/2021)
CATEGORY: India Equity
(as of 09/30/2021)
CATEGORY: India Region Funds
Ratings agency calculation methodology
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.
Lead Manager
Portfolio Manager
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.
Co-Manager
Portfolio Manager
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 the firm in 2005 as a Research Analyst, 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.
Sources: Factset Research Systems, Inc.
Fund Risk Metrics are reflective of Investor share class.
Sources: Zephyr StyleADVISOR
Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: BNY Mellon Investment Servicing (US) Inc.
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.
Visit our Glossary of Terms page for definitions and additional information.
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 September 30, 2021
For the quarter ending September 30, 2021, the Matthews India Fund returned 9.18% (Investor Class) and 9.26% (Institutional Class), while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned 12.23% over the same period.
Market Environment:
The positive performance of the Indian equity market continued during the third quarter, led by sustained high retail equity flows, as demonstrated by the near doubling of individual retail brokerage accounts over the last 12 months. Equity market performance over the last 18 months, coupled with extremely low interest rates for savings accounts, were the two primary drivers of higher retail participation in equity markets. To a lesser extent, the shift to work-from-home culture was also a contributor. In addition, the regulatory crackdown in China over the last few months has made global investors look at India more favorably within the context of regional equity exposure.
After a disastrous second COVID-19 wave, India’s economic improvement has been swift. Confidence in India’s ability to handle a potential third wave has been boosted given the rapid and extensive vaccination program that is underway. India is now vaccinating over 10 million people on a daily basis. Increasing rates of vaccination are reducing the underlying fear and improving the probability of economic normalization in months to come. This has had a positive impact in particular on the financials sector, where investors are beginning to be more optimistic about normalization of credit quality and credit growth in quarters to come.
Performance Contributors and Detractors:
On a sector basis, our allocation to health care was the biggest detractor during the quarter. The health care sector in general went out of favor due to concerns of generic drug pricing pressure in the U.S. While the portfolio has very little exposure to manufacturers involved in marketing generic formulations in the U.S., given the negative sentiment in the sector as a whole, our holdings in Laurus Labs and Neuland Labs were both down. With increased active pharmaceutical ingredient (API) outsourcing to India, we continue to believe these holdings have the potential to achieve good growth in coming quarters, and we expect both of them to sustain or have multiple re-ratings from current levels.
On the other hand, our stock selection within the information technology (IT) sector contributed to relative performance. Mindtree and Larsen & Toubro Infotech (LTI) were the biggest positive contributors in the sector. India-based IT services firms are seeing strong demand on the back of greater outsourcing of digital services by corporates globally. Investors seem to expect the current growth trend to continue for the coming two to three years, which has driven a substantial valuation expansion in this sector, including Mindtree and LTI.
Notable Portfolio Changes:
We made a few changes during the third quarter, including exiting Alembic Pharmaceuticals. Alembic Pharma had done well on the back of favorable tailwinds in their U.S. generic formulations business, supported by favorable supply and demand dynamics. But we think the pricing environment will be unfavorable in coming quarters, which may have a negative impact on Alembic’s volume growth and bottom line. Consequently, we decided to exit our holding in the stock.
In terms of additions to the portfolio, we have been busy evaluating many initial public offerings (IPOs) over the past few months. E-commerce has seen skyrocketing growth and we participated in the IPO of e-commerce platforms, Zomato and Cartrade Tech. Zomato is an online restaurant discovery and food delivery business, with one of the largest market shares in the country. We believe Zomato can sustain its solid growth in subsequent years as Indians order more frequently or eat out more. Cartrade is an online discovery and research platform for users to post, search, sell and purchase cars. Given Cartrade’s high website traffic, we think auto original equipment manufacturers (OEMs) would spend more in coming years on online advertising which would be beneficial for the company. We also see room for growth in Cartrade’s used car auction platform which is a very profitable business but has seemed underappreciated by the market.
Outlook:
While we remain optimistic about the macroeconomic environment in India, we are also closely watching certain headwinds that can have a negative impact on equity markets in particular. We continue to believe that India is coming out of a cyclical slowdown which started in 2018. Low real interest rates within India are fueling a revival of the real estate sector which has been in doldrums for the last five or six years. We believe this trend, coupled with the government’s focus on infrastructure creation, will be a major driver of economic improvement in general, and the construction industry in particular, in coming quarters. The government’s emphasis on manufacturing, coupled with a global push for alternate suppliers outside of China, is also leading to greater private capital expenditures in manufacturing. Additionally, expansion projects announced by core industries like steel and cement will likely lead to job growth, and as a consequence, a faster pace of economic growth compared to prior years. Aside from this, we are also seeing widespread hiring activity in sectors like banking, IT services, and health care, among others, which traditionally have been providers of white collar jobs, but over the past few years have lagged. This is another positive trend from the perspective of supporting sustained growth in consumption in the years to come.
In terms of risk, we continue to remain wary of inflation and its potential to surprise on the upside. With oil prices pushing US$80 per barrel at the end of the quarter, we believe inflationary pressure is going to become more pressing in the months to come. At present, demand continues to be robust but persistent inflation runs the risk of eventual demand destruction. Within the backdrop of inflationary pressure, India’s central bank has been accommodative so far, but it is not clear how long that will last. If the U.S. Fed begins to raise its benchmark interest rate, it seems inevitable that policy tightening would also start in India. In this context, valuations are far above long-term averages and any monetary policy tightening could create a sharp negative correction in the equity markets globally, India included.
As of September 30, 2021, the securities mentioned comprised the Matthews India Fund in the following percentages: Laurus Labs, 2.0%; Neuland Laboratories, 1.0%; Mindtree, 1.5%; Larsen & Toubro Infotech, 2.0%; Zomato, 0.4%; and Cartrade Tech, 0.3%. The Fund held no positions in Alembic Pharmaceuticals.
Current and future portfolio holdings are subject to change and risk.
Average Annual Total Returns - MINDX as of 09/30/2021
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.