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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

-32.48%

YTD Return

(as of 12/05/2022)

$21.60

NAV

(as of 12/05/2022)

-0.27

1 Day NAV Change

(as of 12/05/2022)

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 $706.86 million (10/31/2022)
Currency USD
Ticker MPACX
Cusip 577-130-867
Portfolio Turnover 42.4%
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 1.07%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 10/31/2022
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
0.16% -13.55% -39.39% -45.53% -7.04% -3.11% 3.52% 6.27%
MSCI All Country Asia Pacific Index
-1.95% -14.32% -27.60% -28.92% -3.40% -1.53% 3.84% 5.26%
As of 09/30/2022
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
-12.04% -11.92% -39.48% -46.14% -5.99% -2.56% 3.40% 6.29%
MSCI All Country Asia Pacific Index
-11.81% -11.05% -26.16% -27.49% -1.37% -0.31% 4.01% 5.40%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Asia Growth Fund - MPACX
MPACX
-14.65% 46.76% 26.18% -16.25% 39.39% 0.92% -0.05% 1.49% 19.35% 17.47%
MSCI All Country Asia Pacific Index
-1.19% 20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29% 12.19% 17.05%

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 09/30/2022)

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 10 funds
  • 3 YEAR
  • out of 10 funds
  • 5 YEAR
  • out of 10 funds
  • 1 YEAR
  • 4th
  • 28 out of 28 funds
  • 3 YEAR
  • 4th
  • 22 out of 25 funds
  • 5 YEAR
  • 3rd
  • 14 out of 23 funds
  • 10 YEAR
  • 2nd
  • 8 out of 20 funds
  • SINCE INCEPTION
  • 2nd
  • 4 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

Portfolio Characteristics

(as of 09/30/2022)
Fund Benchmark
Number of Positions 53 1,507
Weighted Average Market Cap $46.6 billion $67.3 billion
Active Share 86.3 n.a.
P/E using FY1 estimates 24.0x 11.3x
P/E using FY2 estimates 21.1x 10.9x
Price/Cash Flow 19.8 7.0
Price/Book 3.6 1.4
Return On Equity 9.4 14.3
EPS Growth (3 Yr) 11.5% 10.8%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 09/30/2022)
-3.48%
Alpha
1.14
Beta
105.39%
Upside Capture
118.48%
Downside Capture
-0.29
Sharpe Ratio
-0.36
Information Ratio
12.66%
Tracking Error
70.10

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 11/30/2022)
Name Sector Country % Net Assets
PT Bank Rakyat Indonesia Persero Tbk Financials Indonesia 5.2
HDFC Bank, Ltd. Financials India 5.0
CSL, Ltd. Health Care Australia 4.4
Daiichi Sankyo Co., Ltd. Health Care Japan 4.0
Shenzhen Inovance Technology Co., Ltd. Industrials China/Hong Kong 3.8
Bajaj Finance, Ltd. Financials India 3.4
Dabur India, Ltd. Consumer Staples India 3.2
BeiGene, Ltd. Health Care China/Hong Kong 3.2
Keyence Corp. Information Technology Japan 3.2
Innovent Biologics, Inc. Health Care China/Hong Kong 3.0
TOTAL 38.4

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 09/30/2022)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Health Care 24.9 6.9 18.0
Consumer Discretionary 18.2 15.0 3.2
Information Technology 15.2 16.3 -1.1
Financials 14.7 19.0 -4.3
Communication Services 7.9 8.6 -0.7
Consumer Staples 7.7 6.1 1.6
Industrials 6.4 11.4 -5.0
Materials 3.4 7.0 -3.6
Energy 1.0 3.2 -2.2
Real Estate 0.0 4.1 -4.1
Utilities 0.0 2.4 -2.4
Cash and Other Assets, Less Liabilities 0.5 0.0 0.5

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

Country Fund Benchmark Difference
Japan 31.0 31.5 -0.5
China/Hong Kong 26.8 24.7 2.1
India 24.5 10.0 14.5
Australia 7.1 11.1 -4.0
Indonesia 5.3 1.4 3.9
United States 2.0 0.0 2.0
Vietnam 1.2 0.0 1.2
Singapore 1.1 2.2 -1.1
Taiwan 0.5 8.9 -8.4
South Korea 0.0 7.0 -7.0
Thailand 0.0 1.4 -1.4
Malaysia 0.0 1.0 -1.0
Philippines 0.0 0.5 -0.5
New Zealand 0.0 0.3 -0.3
Cash and Other Assets, Less Liabilities 0.5 0.0 0.5

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 47.5 54.7 -7.2
Large Cap ($10B-$25B) 19.2 22.6 -3.4
Mid Cap ($3B-$10B) 22.3 20.6 1.7
Small Cap (under $3B) 10.5 2.1 8.4
Cash and Other Assets, Less Liabilities 0.5 0.0 0.5

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 $0.47969 $1.17413 $1.65382 4.8% 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, 2022

For the quarter ending September 30, 2022, the Matthews Asia Growth Fund returned -11.92% (Investor Class) and -11.88% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index returned -11.05%.

Market Environment:

The third quarter was again a challenging period for equity markets. Apart from the constant pressure from U.S. Federal Reserve rate tightening, the biggest macro headwind has been China’s zero-COVID policy which has been hitting the heart of its economy. The only consolation was a shrinkage of oil demand from one of the world’s largest oil consumers, China. In August, China also resolved a long-running audit dispute with the U.S. Public Company Accounting Oversight Board (PACOB), and PACOB inspectors are now checking the accounting workbooks for Chinese companies listed in the U.S. With a global recession expected in coming quarters, “growth” stocks outperformed “value” during the quarter, although the rally lasted only in July and was flattened out in August and September. Currencies in Asia continued to fall during the quarter: South Korean won was down 9.3%, followed by Taiwanese dollar (-6.5%) and the Thai baht (-6.3%), but the Japanese yen’s year-to-date weakness (-20.5%) still stands out as the Bank of Japan’s dovish policy remains unchanged.

Performance Contributors and Detractors:

By country, China/HK continued to be the largest detractor to Fund performance during the quarter as companies suffered from China’s ongoing zero-COVID policy and a weakening property market, leading to poor consumer sentiment. On the other hand, India continued to be the largest contributor as Indian companies in general have been relatively stable and relatively unharmed by regulatory issues experience elsewhere in the region. Japan was also a positive contributor on a relative basis, despite a very weak yen and sluggish economy. From a sector perspective, our stock selection within financials and consumer staples contributed the most to relative performance while our stock selection in health care and consumer discretionary detracted the most from relative performance.

Turning to individual securities, the top three contributors were all Indian holdings: Bajaj Finance, a diversified non-banking financial company; Dabur, a fast-moving consumer goods company; and Avenue Supermarts, an operator of hypermarkets in the country. On the other hand, the main detractors to performance were all Chinese holdings, except for Sony. Chinese electric vehicle (EV) maker Xpeng detracted the most as the company has been going through a challenging period faced with an intensified competitive environment with cheaper models. Silergy, a Chinese power management chip manufacturer, continued to be a drag year to date, along with the semiconductor industry. In our view, the short-term inventory overbuild is a bit overblown and the company has a clear long-term path in a less crowded analogue chipmaker industry in China.

Notable Portfolio Changes:

During the quarter, we re-entered India’s online food delivery platform Zomato. We had initially participated in Zomato’s IPO in July 2021 but exited in January of this year due to high valuation and a deteriorating competitive landscape with Swiggy, the main rival. However, our on-the-ground research revealed better performance in terms of market share and margin profile. We think e-commerce companies in India have a fair chance of success as has happened elsewhere in the world. We also initiated a position in Ono Pharmaceutical, which is primarily engaged in the manufacture and sale of pharmaceuticals, after our positive meeting with the company in Tokyo in June. The company’s blockbuster cancer drug, Optivo, co-developed with Bristol-Myers Squibb, has been impressively gaining market share in Japan.

During the quarter, we reduced our position in some of our holdings including Toyota Motor due to the global economic slowdown and the company’s somewhat still vague EV strategy. We also exited Tokyo Electron, a major semiconductor equipment maker, due to our view that the market downturn would continue. 

Outlook:

As we anticipated, the “value reversal” has ended. However, we are still up against many macro headwinds: inflation; U.S.-China tensions; the Russia-Ukraine war; and COVID suppression in China, which must be the biggest hurdle to clear. Two upcoming political events, namely China’s Party Congress in October and the U.S. mid-term elections in November, might further complicate geopolitical tension. In this environment, shutting off from all the noise and looking at the key fundamentals including earnings power, competitive landscape, and management quality to reassess long-term value of each entity becomes even more critical. We see a few positives in the markets today as the current interest rate cycle is nearing the end and very cheap valuations for many quality stocks provide fertile hunting ground.

Top 10 holdings as of September 30, 2022. Current and future holdings are subject to change and risk.



Average Annual Total Returns - MPACX as of 09/30/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-46.14% -5.99% -2.56% 3.40% 6.29% 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 1.07%

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.