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Matthews Asia Growth Fund
MPACX

Snapshot
  • Unconstrained growth strategy investing across Asia Pacific’s developed, emerging and frontier markets
  • Focus on the most profitable and attractive growth opportunities in Asia
  • Highly-differentiated portfolio offers exposure to names often under-represented in broader global equity strategies

10/31/2003

Inception Date

0.00%

YTD Return

(as of 12/01/2023)

$20.84

NAV

(as of 12/01/2023)

+0.11

1 Day NAV Change

(as of 12/01/2023)

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.

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

Fund Facts
Inception Date 10/31/2003
Fund Assets $384.36 million (10/31/2023)
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
Fees & Expenses
Gross Expense Ratio 1.13%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 10/31/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund - MPACX
10/31/2003
MPACX
-2.86% -10.25% -7.15% 2.44% -13.01% -1.14% 1.55% 6.07%
MSCI All Country Asia Pacific Index
-4.22% -11.10% -0.84% 13.78% -1.70% 2.88% 3.31% 5.67%
As of 09/30/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund - MPACX
10/31/2003
MPACX
-4.09% -3.44% -4.41% 5.62% -11.62% -3.00% 2.08% 6.25%
MSCI All Country Asia Pacific Index
-2.44% -2.65% 3.52% 16.48% 0.06% 1.71% 4.04% 5.93%
For the years ended December 31st
Name 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Matthews Asia Growth Fund - MPACX
MPACX
-33.12% -14.65% 46.76% 26.18% -16.25% 39.39% 0.92% -0.05% 1.49% 19.35%
MSCI All Country Asia Pacific Index
-16.92% -1.19% 20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29% 12.19%

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 09/30/2023)

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 10 funds
  • 3 YEAR
  • out of 10 funds
  • 5 YEAR
  • out of 10 funds
  • 1 YEAR
  • 4th
  • 19 out of 20 funds
  • 3 YEAR
  • 4th
  • 16 out of 16 funds
  • 5 YEAR
  • 4th
  • 15 out of 16 funds
  • 10 YEAR
  • 3rd
  • 9 out of 14 funds
  • SINCE INCEPTION
  • 2nd
  • 5 out of 9 funds

Ratings agency calculation methodology

Portfolio Managers

Taizo  Ishida photo
Taizo Ishida

Lead Manager

Michael J. Oh, CFA photo
Michael J. Oh, CFA

Co-Manager

Peeyush  Mittal, CFA photo
Peeyush Mittal, CFA

Co-Manager

Portfolio Characteristics

(as of 09/30/2023)
Fund Benchmark
Number of Positions 57 1,544
Weighted Average Market Cap $80.7 billion $82.0 billion
Active Share 78.9 n.a.
P/E using FY1 estimates 21.2x 13.9x
P/E using FY2 estimates 17.7x 12.4x
Price/Cash Flow 13.7 7.6
Price/Book 2.8 1.5
Return On Equity 11.6 14.6
EPS Growth (3 Yr) 30.5% 15.9%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 09/30/2023)
-10.93%
Alpha
1.06
Beta
76.06%
Upside Capture
129.81%
Downside Capture
-0.63
Sharpe Ratio
-1.05
Information Ratio
11.13%
Tracking Error
72.90

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 10/31/2023)
Name Sector Country % Net Assets
PT Bank Rakyat Indonesia Persero Tbk Financials Indonesia 5.0
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 4.5
Keyence Corp. Information Technology Japan 4.3
Disco Corp. Information Technology Japan 3.8
Bajaj Finance, Ltd. Financials India 3.7
Sumitomo Mitsui Financial Group, Inc. Financials Japan 3.2
Maruti Suzuki India, Ltd. Consumer Discretionary India 3.2
Legend Biotech Corp. Health Care China/Hong Kong 3.1
BeiGene,?Ltd. Health Care China/Hong Kong 3.0
Axis Bank, Ltd. Financials India 2.9
TOTAL 36.7

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 09/30/2023)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 22.8 15.4 7.4
Financials 19.6 19.6 0.0
Information Technology 17.0 17.6 -0.6
Health Care 17.0 6.1 10.9
Industrials 6.9 12.2 -5.3
Communication Services 6.3 8.2 -1.9
Materials 4.1 7.1 -3.0
Consumer Staples 3.8 5.4 -1.6
Energy 1.5 3.0 -1.5
Real Estate 0.0 3.4 -3.4
Utilities 0.0 2.0 -2.0
Cash and Other Assets, Less Liabilities 1.0 0.0 1.0

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

Country Fund Benchmark Difference
Japan 45.0 33.3 11.7
China/Hong Kong 18.8 22.5 -3.7
India 17.6 10.1 7.5
Indonesia 4.9 1.3 3.6
Taiwan 4.7 9.4 -4.7
Australia 3.6 10.7 -7.1
South Korea 2.5 7.8 -5.3
Singapore 1.3 2.1 -0.8
Thailand 0.5 1.2 -0.7
Malaysia 0.0 0.9 -0.9
Philippines 0.0 0.4 -0.4
New Zealand 0.0 0.3 -0.3
Macau 0.0 0.1 -0.1
Cash and Other Assets, Less Liabilities 1.0 0.0 1.0

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 56.8 58.4 -1.6
Large Cap ($10B-$25B) 20.9 21.2 -0.3
Mid Cap ($3B-$10B) 10.9 19.3 -8.4
Small Cap (under $3B) 10.3 1.1 9.2
Cash and Other Assets, Less Liabilities 1.0 0.0 1.0

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)
12/13/2022 12/14/2022 $0.00000 $0.00000 $0.57757 $0.57757 2.6% 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, 2023

For the quarter ending September 30, 2023, the Matthews Asia Growth Fund returned -3.44% (Investor Class) and -3.35% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned -2.65%.

Market Environment:

Value investing re-emerged in strong fashion in Asia last quarter after underperforming in relation to growth investing in the first two quarters of the year. Within the region, India and Japan were among the outperformers last quarter while South Korea and Taiwan were some of the biggest underperformers; China also underperformed but to a lesser extent. Debate over the trajectory of the Federal Reserve’s interest rate continued to grab the attention of global investors in the quarter. We also saw some correction in the semiconductor market, which was over-extended in our view, and this was partly due to concerns over a cyclical downturn. In China, fewer and smaller economic stimulus policies than expected added stress to the country’s equities. Staying with China, a new anti-corruption campaign against the health-care industry added additional headwinds to beaten-down pharmaceutical names. Another high-profile talking point was the future of the Bank of Japan’s yield curve control (YCC) policy given the long-awaited inflationary activity its economy is now experiencing.

Performance Contributors and Detractors:

Regionally, our stock selection in Japan was the biggest detractor to relative performance in the quarter. Value-orientated stocks and dividends continued to be the drivers in Japanese equities which hurt our growth posture toward the market. Stock selections in Singapore, Indonesia and Taiwan also detracted though the latter was mitigated by our underweight position. On the other hand, stock selection in China/Hong Kong was the biggest contributor to relative performance, particularly in the health-care segment. Our overweight in India and underweight in South Korea also contributed.

At the sector level, stock selection in communication services was the biggest detractor to relative performance, impacted by declines in some consumer platform and e-commerce stocks. Our overweight in health care and stock selection in financials and materials also detracted. In contrast, our overweight and stock selection in consumer discretionary was the largest contributor to relative performance, helped by gains in auto and hotel stocks. Our underweight and stock selection in industrials was also a top contributor.

At the holdings level, Keyence Corp., Daiichi Sankyo and HDFC Bank were the biggest detractors to relative performance and total returns. Daiichi Sankyo, a Japanese big pharma firm, has been weak since the mixed data readout from a Phase 3 clinical trial of its non-small cell cancer drug in early July.  The company has been very successful with Antibody Drug Conjugate (ADC) drug suites and more data on the same trial should come out in late October. We are confident the stock will recover. Keyence, the Japanese factory automation company, fell after reporting results in July that missed expectations. The stock was also impacted by negative market sentiment regarding China’s economy. Our conviction in the stock remains strong. The stock of Indian lender HDFC Bank has corrected after having had a price-to-earnings ratio (P/E) at the high end of the historical range. While we think there may be slower growth ahead we like the company as a core holding.

On the flip side, Japan Elevator Service Holdings and Innovent Biologics were among the biggest contributors in the period. Japan Elevator Service’s stock had endured a challenging quarter until the company reported very strong first-quarter earnings in early August. Innovent Biologics, a Chinese biopharmaceutical company, had been impacted by negative sentiment over the launch of the anti- corruption campaign in China’s health-care sector but recovered in part due to its cheap valuation and the easing pressure on doctors as the government’s investigation in the sector has become more targeted.

Notable Portfolio Changes:  

Among changes in holdings in the quarter, we sold some of our position in HDFC Bank and initiated positions in Axis Bank, also in India, and in ZOZO, a Japanese e-commerce company. In Axis Bank we recognize a passion and quality in the management team and believe that it can be one of the biggest beneficiaries of India's digital transformation which we think will see a shift in customer business from public bank accounts to private banks over time. ZOZO is a leading consumer fashion platform in which we have invested in the past. We believe the company is still one of the premier quality growth businesses in Japan with higher penetration of e-commerce. During the period we exited our holdings in Reliance Industries in India and in Shenzhen Inovance Technology in China.

Outlook:

Though it’s hard to pinpoint the exact timing of the Fed’s rate-hike peak we believe the U.S. economy will cool down eventually and when it does that should be positive for the growth stocks we own. While U.S.-China geopolitical tensions are squeezing fresh foreign investment in China, we believe ‘China Plus One’  strategies—whereby companies maintain operations in China while establishing units in other markets in the region—are working for countries like India, Vietnam, and Japan. Through in-person meetings we have been excited to discover more companies pursuing this strategy. In China we expect more top-down economic stimulus measures to be announced. While it’s a matter of debate whether confidence will return to Chinese consumers and small business owners as a result, we think valuations are cheap enough to make an investment case in China. Lastly, in Japan, we are cautious to some extent over the outlook as we believe a weak yen will be harder to sustain against the U.S. dollar once the American economy begins to cool down. 

 

View the Fund’s Top 10 holdings as of September 30, 2023. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MPACX as of 09/30/2023
1YR 3YR 5YR 10YR Since Inception Inception Date
5.62% -11.62% -3.00% 2.08% 6.25% 10/31/2003

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 1.13%

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.