TOP
Fixed Income

Matthews Asia Total Return Bond Fund MAINX

The Fund's name changed from Matthews Asia Strategic Income Fund to the Matthews Asia Total Return Bond Fund on January 31, 2020.

Snapshot
  • Unconstrained, total return strategy seeking high, risk-adjusted returns through credit, currencies and interest rates
  • Fundamental, bottom-up investment process to generate alpha
  • Designed to comple­ment an emerging market or international fixed income strategy and augment allocation to Asia

11/30/2011

Inception Date

-1.07%

YTD Return

(as of 01/15/2021)

$11.13

Price

(as of 01/15/2021)

$114.85 million

Fund Assets

(as of 12/31/2020)

Objective

Seeks total return over the long term with an emphasis on income.

Strategy

Under normal circumstances, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in income-producing securities including, but not limited to, dividend paying equity securities, and debt and debt-related instruments issued by governments, quasi-governmental entities, supra-national institutions, and companies in Asia. Investments may be denominated in any currency, and may represent any part of a company’s capital structure from debt to equity or with features of both.

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. Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflation risks. 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.

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

Fund Facts
Inception Date 11/30/2011
Fund Assets $114.85 million (12/31/2020)
Currency USD
Ticker MAINX
Cusip 577-125-503
Portfolio Turnover 84.38%
Benchmark 50% Markit iBoxx Asian Local Bond Index, 50% J.P. Morgan Asia Credit Index Markit iBoxx Asian Local Bond Index
Geographic Focus Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region
Fees & Expenses
Gross Expense Ratio 1.08%
Net Expense Ratio 1.07%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • data_graph_selected Created with Sketch.
  • bar_graph_selected Created with Sketch.
As of 12/31/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Total Return Bond Fund
MAINX
2.11% 5.41% 5.36% 5.36% 4.54% 6.35% n.a. 5.01% 11/30/2011
50% Markit iBoxx Asian Local Bond Index, 50% J.P. Morgan Asia Credit Index
1.20% 3.70% 7.95% 7.95% 5.74% 5.87% n.a. 4.78%
Markit iBoxx Asian Local Bond Index
1.76% 5.61% 9.55% 9.55% 5.93% 6.07% n.a. 3.75%
As of 12/31/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Total Return Bond Fund
MAINX
2.11% 5.41% 5.36% 5.36% 4.54% 6.35% n.a. 5.01% 11/30/2011
50% Markit iBoxx Asian Local Bond Index, 50% J.P. Morgan Asia Credit Index
1.20% 3.70% 7.95% 7.95% 5.74% 5.87% n.a. 4.78%
Markit iBoxx Asian Local Bond Index
1.76% 5.61% 9.55% 9.55% 5.93% 6.07% n.a. 3.75%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Asia Total Return Bond Fund
MAINX
5.36% 13.00% -4.05% 9.40% 8.85% -0.58% 2.54% -0.50% 13.62%
50% Markit iBoxx Asian Local Bond Index, 50% J.P. Morgan Asia Credit Index
7.95% 10.18% -0.59% 8.39% 3.79% -0.05% 6.37% -3.96% 11.59%
Markit iBoxx Asian Local Bond Index
9.55% 8.99% -0.44% 11.04% 1.73% -2.88% 4.44% -6.52% 8.93%

Source: BNY Mellon Investment Servicing (US) Inc., Index data from HSBC, iBoxx (Markit). 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.

For the Matthews Asia Total Return Bond Fund, the Index performance reflects the returns of the discontinued predecessor HSBC Asian Local Bond Index up to December 31, 2012 and the returns of the successor Markit iBoxx Asian Local Bond Index thereafter.

Effective January 31, 2020, the Fund changed its benchmark to a blended benchmark comprised of 50% Markit iBoxx Asian Local Bond Index (ALBI) and 50% J.P. Morgan Asia Credit Index (JACI). Prior to January 31, 2020, the Fund's benchmark was the Markit iBoxx Asian Local Bond Index. Matthews believes that the blended benchmark is more appropriate in light of the Fund's current investment strategy.

As of May 1, 2016, the HSBC Asian Local Bond Index became the Markit iBoxx Asian Local Bond Index.

Growth of a Hypothetical $10,000 Investment Since Inception

(as of 12/31/2020)

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.

Yield

(as of 12/31/2020)
6.27% Yield to Worst
4.80% 30-Day Yield
4.68% 30-Day Yield (excluding expense waiver)

30-Day Yield Source: BNY Mellon Investment Servicing (US) Inc.

Ratings

  • OVERALL
  • out of 244 funds
  • 3 YEAR
  • out of 244 funds
  • 5 YEAR
  • out of 192 funds
  • 1 YEAR
  • 3rd
  • 140 out of 261 funds
  • 3 YEAR
  • 2nd
  • 104 out of 244 funds
  • 5 YEAR
  • 3rd
  • 126 out of 194 funds
  • SINCE INCEPTION
  • 3rd
  • 44 out of 85 funds

Ratings agency calculation methodology

Portfolio Managers

Teresa  Kong, CFA photo
Teresa Kong, CFA

Lead Manager

Satya  Patel photo
Satya Patel

Co-Manager

Wei  Zhang photo
Wei Zhang

Co-Manager

Portfolio Characteristics

(as of 12/31/2020)
4.3
Modified Duration
42
Number of Positions

Source: BNY Mellon Investment Servicing (US) Inc.

Top 10 Positions

(as of 12/31/2020)
Name Sector Currency % Net Assets
Network i2i, Ltd., 5.650%, 04/15/2068 Communication Services U.S. Dollar 5.7
Wanda Properties International Co., Ltd., 7.250%, 01/29/2024 Real Estate U.S. Dollar 4.7
Viet Nam Debt & Asset Trading Corp., 1.000%, 10/10/2025 Financials U.S. Dollar 4.7
ABJA Investment Co. Pte, Ltd., 5.450%, 01/24/2028 Materials U.S. Dollar 4.1
Luye Pharma Group, Ltd., Cnv., 1.500%, 07/09/2024 Health Care U.S. Dollar 3.9
Poseidon Finance 1, Ltd., Cnv., 0.000%, 02/01/2025 Financials U.S. Dollar 3.9
Times China Holdings, Ltd., 6.200%, 03/22/2026 Real Estate U.S. Dollar 3.5
Logan Group Co., Ltd., 5.250%, 02/23/2023 Real Estate U.S. Dollar 3.5
Malaysia Government Bond, 4.642%, 11/07/2033 Foreign Government Bonds Malaysian Ringgit 3.2
KWG Group Holdings, Ltd., 5.875%, 11/10/2024 Real Estate U.S. Dollar 3.0
TOTAL 40.2

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 12/31/2020)
  • Sector Allocation
  • Country Allocation
  • Currency Allocation
  • Quality Distribution
  • Asset Type Breakdown
Sector Fund
Real Estate 23.2
Foreign Government Bonds 20.2
Financials 16.7
Communication Services 8.8
Materials 6.6
Consumer Discretionary 6.1
Energy 3.9
Health Care 3.9
Industrials 0.9
Cash and Other Assets, Less Liabilities 9.7

"Foreign Government Bonds" category includes supranationals.
Cash and Other Assets may include the mark-to-market value of forward currency exchange contracts and certain derivative instruments.

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

By issuer's country of risk Fund
China/Hong Kong 40.4
India 12.8
Indonesia 12.2
Philippines 7.7
Malaysia 6.3
Vietnam 4.7
Switzerland 2.5
Thailand 2.2
South Korea 1.6
Cash and Other Assets, Less Liabilities 9.7

Not all countries are included in the benchmark index. Cash and Other Assets may include the mark-to-market value of forward currency exchange contracts and certain derivative instruments.
Supranational is an international organization in which member states transcend national boundaries, (ex. IMF).

Currency Fund Contribution To Duration
U.S. Dollar 43.0 1.9
South Korean Won 10.3 0.0
Singapore Dollar 9.3 0.0
China Renminbi 8.6 0.3
Malaysian Ringgit 6.6 0.7
Indonesian Rupiah 6.5 0.5
Philippines Peso 5.4 0.2
Thailand Baht 5.3 0.7
Indian Rupee 3.4 0.0
China Renminbi Offshore 1.6 0.0

Cash and other assets may include forward currency exchange contracts and certain derivative instruments that have been marked-to-market.

Quality Distribution Fund
A- 6.3
BBB+ 2.2
BBB 11.7
BBB- 2.5
BB+ 0.2
BB 12.7
BB- 13.5
B+ 13.9
B 2.5
CCC+ 2.9
Not Rated 22.0
Cash and Other Assets, Less Liabilities 9.7

Credit quality is provided for the underlying bond holdings of the Fund and does not include common equities, cash and other assets and percentage values will not total 100%. Credit quality rating symbols reflect that of S&P and generally credit ratings range from AAA (highest) to D (lowest). When ratings from Moody's, S&P and Fitch are available for a bond in the Fund, the middle rating of the three is used. When two ratings are available, the lowest rating is used. When only one rating is provided, that one is used. Foreign government bonds without a specific rating are assigned the country rating provided by one of the three agencies. Securities that are not rated by any one of the three agencies are reflected as such.
Sources: FactSet Research Systems, Moody's, S&P and Fitch

Asset Type Fund
Corporate Bonds 56.1
Government Bonds 24.8
Convertible Bonds 9.4
Cash and Other Assets, Less Liabilities 9.7

Cash and Other Assets may include the mark-to-market value of forward currency exchange contracts and certain derivative instruments.

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 $0.08400 $0.00000 $0.00000 $0.08400 0.8% N.A.
11/18/2020 11/19/2020 $0.03377 $0.00000 $0.00000 $0.03377 0.3% N.A.
10/26/2020 10/27/2020 $0.03521 $0.00000 $0.00000 $0.03521 0.3% N.A.
09/28/2020 09/29/2020 $0.03922 $0.00000 $0.00000 $0.03922 0.4% N.A.
08/27/2020 08/27/2020 $0.03914 $0.00000 $0.00000 $0.03914 0.4% N.A.
07/27/2020 07/28/2020 $0.03460 $0.00000 $0.00000 $0.03460 0.3% N.A.
06/24/2020 06/25/2020 $0.03790 $0.00000 $0.00000 $0.03790 0.4% N.A.
05/26/2020 05/27/2020 $0.02973 $0.00000 $0.00000 $0.02973 0.3% N.A.
04/27/2020 04/28/2020 $0.00347 $0.00000 $0.00000 $0.00347 0.0% N.A.
03/25/2020 03/26/2020 $0.03723 $0.00000 $0.00000 $0.03723 0.4% N.A.
02/26/2020 02/27/2020 $0.06300 $0.00000 $0.00000 $0.06300 0.6% N.A.
12/16/2019 12/17/2019 $0.12276 $0.00000 $0.00000 $0.12276 1.1% N.A.
09/16/2019 09/17/2019 $0.13597 $0.00000 $0.00000 $0.13597 N.A. N.A.
06/17/2019 06/18/2019 $0.10379 $0.00000 $0.00000 $0.10379 N.A. N.A.
03/15/2019 03/18/2019 $0.08201 $0.00000 $0.00000 $0.08201 N.A. 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.

}

For the quarter ending September 30, 2020, the Matthews Asia Total Return Bond Fund returned 3.74% (Investor Class) and 3.79% (Institutional Class), while its benchmark, the 50% Markit iBoxx Asia Local Bond Index (ALBI) / 50% JP Morgan Asia Credit Index (JACI), returned 2.19%.

Market Environment:

Despite the once-in-a-century pandemic that gripped the world this year, markets have remained relentlessly optimistic in recent months even in the face of recessionary economic data and poor COVID-19 outcomes throughout much of the world. It was unusual for risk-on assets, like U.S. growth stocks, as well as safe-haven assets, like 10-year U.S. Treasuries, to achieve all-time highs in the same month of August. Within Asian credit, high yield outperformed investment grade as investors felt more comfortable taking more risk for more yield. Asian currencies, on average, were stronger versus the U.S. dollar. It was looking like the Roaring Twenties (2020s that is), even as a second wave of COVID cases hit the U.S. and later, Europe.

Perhaps optimism had outstripped the fundamental realities too far to begin the quarter. September was a risk-off month as markets focused more on the potential bad news—an uncertain result on U.S. Election Day, impasse over a second stimulus package, growing second-waves in Europe forcing more shut-downs and a more delayed timeline for a COVID vaccine. The best performers of August became the worst performers in September. The dollar rose, especially versus emerging market (EM) currencies, whose countries face growing COVID cases and lack the economic resilience and toolkit to combat them.

Within Asian credit, volatility continues to plague companies with the highest credit risks, especially ones with high leverage and upcoming refinancing needs. The markets need to see a clear path to refinancing for these companies before pricing them higher. On the other hand, investment grade and relatively higher quality high yield companies, such as Chinese property companies, have mostly recovered and many breached new highs in the third quarter.

Performance Contributors and Detractors:

The primary drivers of performance during the third quarter were the U.S. dollar-denominated (USD) high yield holdings in the portfolio. Within USD high yield, the three biggest contributors to returns were China issuers, including two China property developers: Dalian Wanda and China Franshion, as well as a China internet company, JD.com. These bonds rose largely based on the improving fundamentals in China.

The biggest detractors to performance this quarter came from the bonds of Indonesian garment manufacturer PB International, Philippines-based fast food chain Jollibee’s, as well as Thai government bonds. PB International’s bonds fell when Moody’s downgraded the company based on its upcoming financing needs and increased working capital needs from an elongated working capital cycle. PB International pivoted part of its production from high tech garments to personal protection equipment. Jollibee’s bond prices fell as revenues continue to remain tepid given the slow pace of reopening and consumer spend in its markets. The price of Thai government bonds fell as yields rose in the quarter.

During the quarter currency was a slightly positive contributor to performance, with gains in Chinese renminbi overweight partially offset losses due to Indonesian rupiah and the Korean won underweight.

Notable Portfolio Changes:

In the third quarter, we exited our positions Chinese internet companies JD.com and Weibo, as these had recovered from the crisis and had reached our price targets. We deployed the funds to add Chinese property developer Times China and the convertible bonds of Poseidon Finance, a financing entity under China Shipbuilding Investment Corporation, a state-owned Chinese shipbuilder exchangeable into Postal Savings Bank of China. We initiated these positions based on their attractive relative value and their strong fundamentals.

On the local currency side, we added China Cinda’s renminbi-denominated bonds to increase our exposure to China currency and rates. We also added local currency-denominated bonds of the Philippines and Malaysia on the expectation that their currencies and rates have room to outperform those of other riskier Asia markets.

Outlook:

We expect the fourth quarter to be an event-driven quarter. Driving volatility will be the U.S. election, debates over a new stimulus package, the relative success of countries response to the pandemic and potential breakthroughs in COVID-19 testing/vaccines/treatment. We recognize that the global economic recovery is still fragile and could worsen if global COVID cases rise or fiscal stimulus lapses. We have already seen geo-political risks resurfacing, in particular between U.S. and China. Despite the Phase One trade agreement having been signed in January 2020, we believe the risk of rising U.S. – China political tensions remains.

On the other hand, we also see potential upside for the market and Asian credit specifically if any of the events listed above turns out positively. In the face of this uncertainty, our strategy will be barbelled, looking to add both high-quality, relatively low risk credit duration and companies that have been disproportionately hurt by the pandemic or recessionary fears, but with room to rally if risk sentiment turns positive. Looking at the medium to long term, we still believe that Asia USD high yield bonds offer the most attractive risk-adjusted returns and we will continue to allocate to this space when we find opportunities.

With the market continuing to reassess the pace of economic recovery, the U.S. 10-year interest rate is on net 3 basis points (0.03%) higher for the quarter. In Asia, we expect to see relatively muted movements in interest rates for most countries. After having reduced interest rates in most Asia countries, we believe some Asia central banks are taking a wait and see approach to additional interest rate cuts.

For currencies, the dispersion of performance going forward will be higher. While a general recovery in risk sentiment helps all Asian currencies, we are mindful of differences between countries, including both country specific macro fundamentals and where each country is relative to the virus cycle.


As of September 30, 2020, the securities mentioned comprised the Matthews Asia Total Return Bonds Fund in the following percentages: Wanda Properties International Co., Ltd., 7.250%, 01/29/2024, 4.9%; PB International BV, 7.625%, 01/26/202, 4.0%; Poseidon Finance 1, Ltd., Cnv., 0.000%, 02/01/2025, 3.1%; Franshion Brilliant, Ltd., 5.750%, 07/17/2067, 3.0%; Times China Holdings, Ltd., 6.200%, 03/22/2026, 2.6%; Poseidon Finance 1, Ltd., Cnv., 0.000%, 02/01/2025, 3.1%; Thailand Government Bond, 1.600%, 12/17/2029, 2.2%; China Cinda Asset Management Co., Ltd., 5.500%, 03/14/2028, 1.5%; Jollibee Worldwide Pte, Ltd., 3.900%, 07/23/2068, 1.4%. The Fund held no positions in JD.com, Inc.; Weibo Corp. Current and future portfolio holdings are subject to change and risk.

Average Annual Total Returns - MAINX as of 12/31/2020
1YR 3YR 5YR 10YR Since Inception Inception Date
5.36% 4.54% 6.35% N.A. 5.01% 11/30/2011
Fees & Expenses
Gross Expense Ratio 1.08%
Net Expense Ratio 1.07%

Matthews has contractually agreed (i) to waive fees and reimburse expenses to the extent needed to limit Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, taxes, interest, brokerage commissions, short sale dividend expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation) of the Institutional Class to 0.90% first by waiving class specific expenses (e.g., shareholder service fees specific to a particular class) of the Institutional Class and then, to the extent necessary, by waiving non-class specific expenses (e.g., custody fees) of the Institutional Class, and (ii) if any Fund-wide expenses (i.e., expenses that apply to both the Institutional Class and the Investor Class) are waived for the Institutional Class to maintain the 0.90% expense limitation, to waive an equal amount (in annual percentage terms) of those same expenses for the Investor Class. The Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement for the Investor Class may vary from year to year and will in some years exceed 0.90%. Any amount waived with respect to the Fund pursuant to this agreement is not subject to recoupment. This agreement will remain in place until April 30, 2021 and may be terminated at any time by the Board of Trustees on behalf of the Fund on 60 days’ written notice to Matthews. Matthews may decline to renew this agreement by written notice to the Trust at least 30 days before its annual expiration date.

Yields as of 12/31/2020
Yield to Worst 6.27%
30-Day Yield 4.80%
30-Day Yield (excluding expense waiver) 4.68%

The 30-Day Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/2020, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate. Source: BNY Mellon Investment Servicing (US) Inc.

Related Funds

MCRDX

Matthews Asia Credit Opportunities Fund

MACSX

Matthews Asian Growth and Income Fund

MEGMX

Matthews Emerging Markets Equity Fund

 

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.