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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

0.03%

YTD Return

(as of 10/26/2021)

$34.95

Price

(as of 10/26/2021)

$8.55 billion

Fund Assets

(as of 09/30/2021)

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.

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

Fund Facts
Inception Date 09/12/1994
Fund Assets $8.55 billion (09/30/2021)
Currency USD
Ticker MAPTX
Cusip 577-130-107
Portfolio Turnover 38.1%
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 1.08%
Net Expense Ratio 1.06%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 09/30/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund
MAPTX
-3.38% -9.30% -4.24% 14.27% 9.56% 8.99% 9.29% 8.76% 09/12/1994
MSCI All Country Asia ex Japan Index
-4.15% -9.23% -3.32% 14.73% 9.50% 10.44% 8.80% 5.12%
As of 09/30/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund
MAPTX
-3.38% -9.30% -4.24% 14.27% 9.56% 8.99% 9.29% 8.76% 09/12/1994
MSCI All Country Asia ex Japan Index
-4.15% -9.23% -3.32% 14.73% 9.50% 10.44% 8.80% 5.12%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews Pacific Tiger Fund
MAPTX
28.83% 10.72% -11.11% 39.96% -0.16% -1.30% 11.79% 3.63% 21.00% -11.41%
MSCI All Country Asia ex Japan Index
25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70% -17.07%

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 09/30/2021)

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 52 funds
  • 3 YEAR
  • out of 52 funds
  • 5 YEAR
  • out of 46 funds
  • 10 YEAR
  • out of 33 funds
  • 1 YEAR
  • 3rd
  • 18 out of 34 funds
  • 3 YEAR
  • 3rd
  • 19 out of 34 funds
  • 5 YEAR
  • 3rd
  • 15 out of 28 funds
  • 10 YEAR
  • 2nd
  • 8 out of 20 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

Portfolio Characteristics

(as of 09/30/2021)
Fund Benchmark
Number of Positions 71 1,210
Weighted Average Market Cap $131.2 billion $146.4 billion
Active Share 67.2 n.a.
P/E using FY1 estimates 21.0x 13.7x
P/E using FY2 estimates 19.6x 12.8x
Price/Cash Flow 17.6 9.6
Price/Book 3.7 1.9
Return On Equity 15.1 13.2
EPS Growth (3 Yr) 2.4% -2.8%

Sources: BNY Mellon Investment Servicing (US) Inc., Factset Research Systems, Inc., Zephyr StyleADVISOR, Matthews Asia

Top 10 Holdings

(as of 09/30/2021)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 6.4
Tencent Holdings, Ltd. Communication Services China/Hong Kong 4.7
Samsung Electronics Co., Ltd. Information Technology South Korea 4.6
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 2.9
AIA Group, Ltd. Financials China/Hong Kong 2.7
Tata Power Co., Ltd. Utilities India 2.6
Hong Kong Exchanges & Clearing, Ltd. Financials China/Hong Kong 2.4
Wuxi Biologics Cayman, Inc. Health Care China/Hong Kong 2.1
Titan Co., Ltd. Consumer Discretionary India 2.0
Central Pattana Public Co., Ltd. Real Estate Thailand 1.9
TOTAL 32.3

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 09/30/2021)
  • 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)
12/15/2020 12/16/2020 $0.08242 $0.42745 $1.49657 $2.00644 6.0% 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 September 30, 2021

For the period ending September 30, 2021, the Matthews Pacific Tiger Fund returned -9.30% (Investor Class) and -9.25 (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned -9.23%.

Market Environment:

Most equity markets in the Asia ex Japan region weakened during the third quarter, as debt-related issues in the real estate sector and policy risks in China came to the fore, and continued supply-chain disruptions seemed to weigh on the prospects for normalization in industries like automobiles and semiconductors. While there were some initial scares around a possible resurgence in COVID-19 related infections, it does appear that the bulk of the region is now better placed to cope with the threat.

For the Asia ex Japan region, earnings have generally been revised upwards since the start of the year, led by South Korea and anticipation of strong recovery in India. Sectors like energy, utilities and materials were the best performing during the quarter, as investors anticipated a reflationary environment to favorably impact earnings.

Contributors and Detractors:

The Fund’s stock selection in the utilities sector in India and an internet holding in Singapore contributed to performance. Our holding in India’s Tata Power Company did well over the quarter, and our holding in Sea, Ltd., a leading internet company in Singapore, was also a notable contributor to relative performance. In China, our holding in Starpower, a domestic leader in making power semiconductor chips and modules, was another contributor to relative performance. In these cases, investors seem to be enthused about these company’s competitive positioning and future growth prospects. Stock selection in South Korea was also a contributor to relative performance, especially within the Fund’s battery materials holdings as the demand for electric vehicles continued to rise.

On the other hand, Taiwan was the biggest detractor to relative performance during the quarter. The portfolio’s IT-related holdings, including Taiwan-based semicomductor foundry TSMC, have given up some of the gains accrued last year, leading to an erosion in the valuation multiples. In addition, holdings in Southeast Asia, including the Philippines and Malaysia, were detractors. Domestically oriented companies in Southeast Asia have not fully recovered, as these countries’ recovery from the pandemic has taken a longer path and resulted in some retrenchment in forward expectations.

Portfolio Changes:

We made a few changes as part of our continuous efforts to position the portfolio into durable earnings, driven by sustainable growth drivers across countries and sectors. We rotated capital from some of the IT companies to new ideas in sectors like renewable energy related materials and financials, especially in South Korea and Taiwan. For example, one addition is the South Korean manufacturer of high-strength industrial yarns Hyosung Advanced Materials. Hyosung has expanded their products into renewable energy applications such as hydgrogen containers.

We also made a few changes in China, shifting into companies with bigger competitive moats and longer-term growth prospects. For example, we added a position in Angelalign Technology, a domestic leading orthodontics manufacturer. As income levels grow in China, demand for such discretionary dental services will likely continue to grow over time.

The team continues to be mindful of valuations and is looking to trim positions that have done well, and at the same time, take advantage of market volatility to add to current holdings where appropriate.

Outlook:

Looking ahead, several crosscurrents are likely to have an impact on Asian equities in the near to medium term. These crosscurrents may affect the evolution of earnings across the region, especially as the policy environment continues to unfold in China, and as inflationary pressures evolve in coming periods. A key uncertainty that emerged during the third quarter was the haphazard implementation of certain policies aimed at improving the energy mix in China. While the end goal is laudable, the poor execution may raise more questions about future missteps from the administration.

One of the biggest unanswered questions concerns pricing pressures, some of which reflect consumer demand that is running ahead of constrained supply chains. While the consumer demand recovery has been impressive, it is quite likely that the pattern of consumption will shift towards personal experiences, in our view. As the pandemic continues to abate, it is also possible that labor and other transportation-related bottlenecks will further ease (barring further interruptions from the coronavirus).

The core of the portfolio continues to be invested in businesses capable of delivering durable earnings growth accompanied by solid cash flow. There are many subsectors such as real estate in India and digital e-commerce in Southeast Asia which may have long runways for growth. In addition, we continue to look for Chinese businesses that are taking long strides in closing the technology gap with the West, and may start to substitute imports. The opportunity set continues to broaden and widen, and we remain focused on finding uncorrelated and diversified long-term growth in Asian equities.

 

As of September 30, 2021, the securities mentioned comprised the Matthews Pacific Tiger Fund in the following percentages: Tata Power Co., 2.6%; Starpower Semiconductor, 1.5%; Sea, Ltd., 1.8%; Taiwan Semiconductor Manufacturing Co. (TSMC), 6.4%; Hyosung Advanced Materials Corp., 0.6%; and Angelalign Technology, 0.4%.

Current and future portfolio holdings are subject to change and risk.

Earnings growth is not representative of the Fund’s future performance.

 

Average Annual Total Returns - MAPTX as of 09/30/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
14.27% 9.56% 8.99% 9.29% 8.76% 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 1.08%
Net Expense Ratio 1.06%

Matthews has contractually agreed to waive fees and reimburse expenses to limit the Total Annual Fund Operating Expenses until April 30, 2022. 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.