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Matthews Pacific Tiger Fund MAPTX

Snapshot
  • Seeks alpha in Asia’s emerging economies by capitalizing on the rising Asia consumer
  • High-conviction equity portfolio focused on sustainable growth companies
  • All-cap fundamental approach driven by on-the-ground, proprietary research

09/12/1994

Inception Date

-17.47%

YTD Return

(as of 07/01/2022)

$22.73

Price

(as of 07/01/2022)

$5.61 billion

Fund Assets

(as of 05/31/2022)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Pacific Tiger 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 Ex Japan. 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.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 09/12/1994
Fund Assets $5.61 billion (05/31/2022)
Currency USD
Ticker MAPTX
Cusip 577-130-107
Portfolio Turnover 46.6%
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia Ex Japan - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region, excluding Japan
Fees & Expenses
Gross Expense Ratio 1.06%
Net Expense Ratio 1.03%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 05/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund
MAPTX
1.90% -8.05% -14.20% -21.32% 4.63% 4.03% 7.11% 7.93% 09/12/1994
MSCI All Country Asia ex Japan Index
0.48% -7.32% -12.28% -21.39% 6.21% 4.67% 6.60% 4.45%
As of 03/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund
MAPTX
-5.21% -11.55% -11.55% -16.76% 3.88% 5.88% 6.45% 8.10% 09/12/1994
MSCI All Country Asia ex Japan Index
-2.74% -7.95% -7.95% -14.42% 5.44% 7.05% 6.05% 4.66%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Pacific Tiger Fund
MAPTX
-4.41% 28.83% 10.72% -11.11% 39.96% -0.16% -1.30% 11.79% 3.63% 21.00%
MSCI All Country Asia ex Japan Index
-4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70%

MSCI AC Asia ex Japan Index since inception value calculated from 08/31/94.

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.

Ratings

  • OVERALL
  • out of 52 funds
  • 3 YEAR
  • out of 52 funds
  • 5 YEAR
  • out of 46 funds
  • 10 YEAR
  • out of 34 funds
  • 1 YEAR
  • 2nd
  • 14 out of 33 funds
  • 3 YEAR
  • 4th
  • 27 out of 33 funds
  • 5 YEAR
  • 3rd
  • 19 out of 28 funds
  • 10 YEAR
  • 2nd
  • 7 out of 19 funds
  • SINCE INCEPTION
  • 1st
  • 1 out of 4 funds

Ratings agency calculation methodology

Portfolio Managers

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Lead Manager

Inbok  Song photo
Inbok Song

Lead Manager

Winnie  Chwang photo
Winnie Chwang

Co-Manager

Andrew  Mattock, CFA photo
Andrew Mattock, CFA

Co-Manager

Portfolio Characteristics

(as of 03/31/2022)
Fund Benchmark
Number of Positions 62 1,220
Weighted Average Market Cap $126.1 billion $130.7 billion
Active Share 67.6 n.a.
P/E using FY1 estimates 19.0x 12.4x
P/E using FY2 estimates 16.1x 11.1x
Price/Cash Flow 14.4 7.9
Price/Book 3.1 1.7
Return On Equity 16.7 15.0
EPS Growth (3 Yr) 12.3% 13.4%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 03/31/2022)
-1.26%
Alpha
0.98
Beta
86.81%
Upside Capture
94.92%
Downside Capture
0.17
Sharpe Ratio
-0.27
Information Ratio
5.76%
Tracking Error
89.74

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 05/31/2022)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 7.7
Tencent Holdings, Ltd. Communication Services China/Hong Kong 4.2
Samsung Electronics Co., Ltd. Information Technology South Korea 3.9
Central Pattana Public Co., Ltd. Real Estate Thailand 3.3
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 2.8
SM Prime Holdings, Inc. Real Estate Philippines 2.8
ICICI Bank, Ltd. Financials India 2.7
Meituan Consumer Discretionary China/Hong Kong 2.5
Kweichow Moutai Co., Ltd. Consumer Staples China/Hong Kong 2.4
CITIC Securities Co., Ltd. Financials China/Hong Kong 2.3
TOTAL 34.6

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
  • Country Allocation
  • Market Cap Exposure

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

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

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)
12/14/2021 12/15/2021 $0.00000 $0.50110 $5.35902 $5.86012 17.4% 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, 2022

For the quarter ending March 31, 2022, the Matthews Pacific Tiger Fund returned -11.55% (Investor Class) and -11.49% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned -7.95% over the same period.

Market Environment:

2022 got off to a choppy start in Asian markets, led by North Asian equities. The confluence of a spike in Covid cases and resulting policy of enforced lockdowns and uncertainties around ADR delisting dragged down Chinese equities which were the worst performing in the region.  On the flip side, rate sensitive stocks powered the Singaporean and Indonesian financials to deliver strong absolute returns in the first quarter, while Energy was the best performing sector in the region. 

Small caps managed to provide a bit of shelter although the returns were still negative during the quarter.  Asian currencies remained somewhat resilient in the face of geopolitical concerns, rising rates in the US, and spiking energy prices. 

Meanwhile, tourism- and consumption-oriented economies like Indonesia and Thailand are attracting foreign investor (FII) flows as the recovery from COVID-19 is starting to gain hold, and equity valuations in those countries remain relatively attractive.  However, other countries like India have experienced FII outflows offset by increasing allocation to equities by domestic entities. 

Performance Contributors and Detractors:

During the quarter, allocation and stock selection in Southeast Asia countries such as the Philippines and Indonesia contributed to relative performance, where we see sustained recovery signs in the domestic economy from the COVID-19. One of the largest contributors, SM Prime, is an operator of shopping malls across Philippines, and has been a longstanding holding in the portfolio.  As COVID restrictions ease, there is growing possibility that earnings and cash flow may recover to levels seen prior to the pandemic. Indonesia's largest automotive group, PT Astra International Tbk was another top contributor. PT Astra International Tbk continues to post strong earnings growth as demand for the automotive are recovered from the pandemic shock.

On the other hand, a combination of factors drove the negative stock selection effect during the quarter.  In particular, the continued rotation from growth towards value stocks impacted IT related holdings like Hana Microelectronics and Will Semiconductor.  Furthermore, the continuation of stringent COVID containment policies in China are hurting the earnings and cash flow prospects for several holdings in the portfolio like China Resources Beer (CRB), which was one of the leading detractors from relative performance.   CRB has a dominant market share in China and is a likely beneficiary of premiumization in the beer category.  We continue to feel enthused about their prospects to grow market share and benefit from the consolidation of Heineken’s China business. 

The ongoing uncertainty around Chinese ADR’s also created volatility for several of the internet-oriented holdings in the portfolio causing an absolute decline in the net asset value of the portfolio.  Post the quarter-end, there were some signs that US and Chinese authorities are looking to resolve their outstanding differences on the issue of auditing process. 

Notable Portfolio Changes:

Over the quarter, we made a few changes as part of their efforts to position the portfolio for sustainable growth and at the same time to manage risks proactively, exiting a few positions by balancing between the progress in companies’ operational milestones and valuation. Kakaopay and Krafton are two examples. Compared to the demanding valuation, Kakaopay’s expected profitability path and Krafton’s newly launched game progress were delayed with weak visibility. In addition, we exited a solar glass maker, Xinyi Solar, due to its capital allocation decision. Corporate governance is the one of the most important criteria for the strategy and we believed that the capital allocation decision was unfavorable for the interest of the minority shareholders.

With some of the regulatory headwinds easing for internet platform companies in China, the team is looking to take advantage of the cheaper valuation for stocks like Meituan which have a dominant presence in their sector. 

On the flip side, some of the Indian holdings were trimmed during the quarter as valuation multiples continue to expand. 

Outlook:

Since the start of the year, fresh set of challenges are testing consumers and companies across Asia.  Higher energy prices may start impacting corporate profitability and eroding consumer spending power if energy prices remain elevated for an extended period.  In China, the uneven recovery from COVID-19 has delayed a recovery in consumption although the health of the consumer balance sheet remains strong, and the government is starting to offer subsidies to rejuvenate domestic spending.  In other parts of Asia, the recovery from COVID-19 is continuing to gain traction and portfolio managers believe earnings may post strong growth in coming periods.  Considering the volatility in stock prices, portfolio managers are encouraged by the combination of attractive valuations, and the prospects of steady growth across many parts of the region. 

 

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 - MAPTX as of 03/31/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-16.76% 3.88% 5.88% 6.45% 8.10% 09/12/1994

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 1.06%
Net Expense Ratio 1.03%

Matthews has contractually agreed to waive fees and reimburse expenses to limit the Total Annual Fund Operating Expenses until April 30, 2023. Please see the Fund’s prospectus for additional details.

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.

 

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.