10/31/2003
Inception Date
-0.86%
YTD Return
(as of 05/30/2023)
$20.66
NAV
(as of 05/30/2023)
-0.26
1 Day NAV Change
(as of 05/30/2023)
Long-term capital appreciation.
Under normal circumstances, the Matthews Asia Growth 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. The Fund may also invest in the convertible securities, of any duration or quality, of Asian companies. 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 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.
| Inception Date | 10/31/2003 | |
| Fund Assets | $610.29 million (04/30/2023) | |
| Currency | USD | |
| Ticker | MPACX | |
| Cusip | 577-130-867 | |
| Portfolio Turnover | 47.5% | |
| Benchmark | MSCI All Country Asia Pacific Index | |
| Geographic Focus | Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region | |
| Gross Expense Ratio | 1.13% | |
| Objective | Long-term capital appreciation. |
| Strategy | Under normal circumstances, the Matthews Asia Growth Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Asia. The Fund may also invest in the convertible securities, of any duration or quality, of Asian companies. The Fund seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information; number of employees; size and stability of cash flow; management’s depth, adaptability and integrity; product lines; marketing strategies; corporate governance; and financial health. |
| Risks |
Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging and frontier markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets.
The risks associated with investing in the Fund can be found in the prospectus |
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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 03/31/2023)
CATEGORY: Diversified Pacific/Asia
| OVERALL | 1 stars | out of 10 funds |
| 3 YEAR | 1 stars | out of 10 funds |
| 5 YEAR | 1 stars | out of 10 funds |
(as of 03/31/2023)
CATEGORY: Pacific Region Funds
| 1 YEAR | 4th | 26 out of 28 funds |
| 3 YEAR | 4th | 25 out of 25 funds |
| 5 YEAR | 4th | 23 out of 25 funds |
| 10 YEAR | 2nd | 8 out of 20 funds |
| SINCE INCEPTION | 2nd | 4 out of 9 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
Taizo Ishida is a Portfolio Manager at Matthews and manages the firm’s Asia Growth and Japan Strategies, and co-manages the firm’s Asia Innovators Strategy. Prior to joining Matthews in 2006, Taizo spent six years on the global and international teams at Wellington Management Company as a Vice President and Portfolio Manager. From 1997 to 2000, he was a Senior Securities Analyst and a member of the international investment team at USAA Investment Management Company. From 1990 to 1997, he was a Principal and Senior Research Analyst at Sanford Bernstein & Co. Prior to beginning his investment career at Yamaichi International (America), Inc. as a Research Analyst, he spent two years in Dhaka, Bangladesh as a Program Officer with the United Nations Development Program. Taizo received a B.A. in Social Science from International Christian University in Tokyo and an M.A. in International Relations from The City College of New York. He is fluent in Japanese.
Co-Manager
Portfolio Manager
Michael Oh is a Portfolio Manager at Matthews and manages the firm’s Asia Innovators and Korea Strategies and co-manages the Asia Growth Strategy. Michael joined Matthews in 2000, and has built his investment career at the firm. Michael was promoted from Research Analyst to Assistant Portfolio Manager in 2003. In 2006 and 2007, he was promoted to Lead Manager of the Matthews Asia Innovators Strategy and the Matthews Korea Strategy, respectively. From 2000-2003, Michael’s research focused on the technology sector supporting multiple strategies managed by the founders of the firm. As a research analyst, he contributed investment ideas to the broader Matthews investment teams. Michael received a B.A. in Political Economy of Industrial Societies from the University of California, Berkeley. He is fluent in Korean.
Co-Manager
Portfolio Manager
Peeyush Mittal is a Portfolio Manager at Matthews and manages the firm’s India Strategy and co-manages the Emerging Markets Equity, Emerging Markets ex China and Asia Growth Strategies. Prior to joining the Matthews 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.
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.
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.
Visit our Glossary of Terms page for definitions and additional information.
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 ex China Index is a free float-adjusted market capitalization-weighted index that captures large and mid cap representation across 23 of the 24 Emerging Markets (EM) countries excluding China: Brazil, Chile, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, 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 MSCI India Index is a free float-adjusted market capitalization-weighted index of Indian equities listed in India.
The MSCI Korea Index is a free float-adjusted market capitalization-weighted index of Korean equities listed in Korea.
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, 2023
For the quarter ended March 31, 2023, the Matthews Asia Growth Fund returned 2.78% (Investor Class) and 2.80% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 4.85% over the same period.
Market Environment:
Inflation remained the hot topic during the first quarter until concerns about select U.S.-based financials took over in early March. But overall, as was the case for much of the last year or so, investors seemed to focus narrowly on the anticipated actions of global central banks—particularly the U.S. Federal Reserve.
Meanwhile, heavily influencing Asian markets was the rather lackluster aftermath of China’s reopening. Whereas many expected a rapid resumption of normal activity, we’ve seen a much more gradual thawing—a pattern we expect to continue in the second quarter and beyond. As anecdotal evidence, we observed on a recent trip to Japan that Asian tourists from most other countries have returned—with the notable exception of China. This is largely because flights from China are still few and far between—and those available remain expensive. But a resumption of normal activity in and from China is largely a matter of time and with that normalization we anticipate improved economic activity, which should in turn positively impact markets.
Performance Contributors and Detractors:
Much of our underperformance during the quarter can be attributed to our China/Hong Kong exposure—both because of our overweight position and stock selection. Our lack of exposure to Taiwan and Korea, which both had solid first quarters, also weighed on relative performance. Conversely, our stock selections in Japan and Singapore were sources of relative strength as investors sought quality companies amid market volatility.
At the sector level, relative weakness was concentrated in our health-care exposure. After a sharply positive fourth quarter, many investors seemingly took some profits in the first quarter, resulting in a breather for the sector and many of its top performers. However, some company-specific issues aside, we don’t currently see any major reasons for concern in health care. Conversely, our underweight and relative strength of holdings in financials was additive to relative performance as the sector faced headwinds related to the U.S. banking flare-up.
At the holdings level, InnoCare Pharma and JD.com were among our bottom contributors. Shares of InnoCare, a Chinese biopharmaceuticals company, were pressured following news that U.S.-based peer Biogen was pulling out of a previously agreed licensing partnership. While this will leave InnoCare without a U.S. partnership we believe the underlying fundamentals remain intact and that InnoCare’s primary market opportunity is in China, not the U.S.
Shares of Chinese e-commerce giant JD.com declined as investors were disappointed with the slow pace of China’s reopening and economic recovery. However, we expect the recovery will still benefit JD.com in the period ahead. Further, JD.com could benefit from a transformation of its business similar to the breakup of Alibaba announced late in the quarter.
Among our top individual contributors were Japanese companies Keyence and Shin-Etsu Chemical. Keyence provides factory automation solutions while Shin-Etsu is a high-quality materials company. We believe both benefited from their quality in the period as investors sought relative safe havens amid market turbulence.
Notable Portfolio Changes:
We initiated several new positions in the first quarter, including Wuxi Biologics and Maruti Suzuki. We have owned Chinese biologics company Wuxi in the past—though we exited in early 2022 as the company was added to the U.S.’s unverified list (UVL) of exporters, which weighed on the stock. With those issues now resolved and the company’s underlying fundamentals intact, we reinitiated a position.
Maruti Suzuki is an Indian auto company and though we decreased our overall exposure to India in the period we believe Maruti Suzuki is well-positioned as the Indian auto market is in a distinctly better position than many global auto markets, including the U.S. and China. India’s economy remains relatively robust, as do its consumers, and Maruti Suzuki is poised to embark on a new model cycle which, paired with solid consumer demand, should benefit the stock in the period ahead.
Our paring of exposure to India included exiting small positions in e-commerce company Zomato and supermarket operator Avenue Supermarts. While we believe there are attractive, select opportunities in India, we find many valuations to be elevated and have consequently been reducing our overall exposure.
Outlook:
The market realized over the course of the first quarter, contrary to its prior belief, that China’s economy won’t take off quickly. But that doesn’t mean it won’t take off. We expect a gradual recovery in the Chinese market as consumers resume more normal economic activity.
The recent announcement that Alibaba would split into six companies is interesting—particularly as we see JD.com now trying to IPO its different brands too. China’s IPO market has been particularly weak lately. Perhaps this new path forward for large platform companies will reinvigorate the Chinese listing market—and, with it, China’s overall capital markets.
On the macroeconomic front, it seems inflationary concerns may finally be winding down—or at least tempering. Regardless, there will undoubtedly always be a macroeconomic ‘problem’ about which to worry and we expect the second quarter to be fine. Earnings will probably still be muted and investors may wait for June earnings before really deciding how they expect the year will pan out.
We believe the macro picture will start clearing up over the coming months and we also think investors will develop more realistic expectations on both the macro and earnings fronts. By the third quarter, we anticipate investors will largely have sorted their views out—which is why the first quarter felt primarily like a period of regrouping.
Top 10 holdings as of March 31, 2023. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MPACX as of 03/31/2023
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 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.