10/31/2005
Inception Date
10.35%
YTD Return
(as of 06/17/2021)
$29.01
Price
(as of 06/17/2021)
$744.54 million
Fund Assets
(as of 05/31/2021)
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 | $744.54 million (05/31/2021) | |
| Currency | USD | |
| Ticker | MINDX | |
| Cusip | 577-130-859 | |
| Portfolio Turnover | 57.4% | |
| Benchmark | S&P Bombay Stock Exchange 100 Index | |
| Geographic Focus | India | |
| Gross Expense Ratio | 1.15% | |
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
Ratings (as of 03/31/2021)
CATEGORY: India Equity
Quartile & Rankings (as of 03/31/2021)
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.
Source: BNY Mellon Investment Servicing (US) Inc.
Source: FactSet Research Systems
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 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
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.