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Matthews India Fund
MINDX

Snapshot
  • Unconstrained all-cap strategy focused on companies with a sustainable competitive edge and pricing power, which are able to perform throughout economic cycles
  • Fundamental bottom-up approach to seek well-run entrepreneurial companies with sustainable organic growth and trustworthy managements
  • Bias toward businesses that cater to rising domestic consumer demand and to policy-independent sectors

10/31/2005

Inception Date

-10.54%

YTD Return

(as of 09/28/2022)

$25.20

NAV

(as of 09/28/2022)

+0.23

1 Day NAV Change

(as of 09/28/2022)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews India Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in publicly traded common stocks, preferred stocks and convertible securities of companies located in India. 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 markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

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

Fund Facts
Inception Date 10/31/2005
Fund Assets $655.30 million (08/31/2022)
Currency USD
Ticker MINDX
Cusip 577-130-859
Portfolio Turnover 42.5%
Benchmark S&P Bombay Stock Exchange 100 Index
Geographic Focus India
Fees & Expenses
Gross Expense Ratio 1.10%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 08/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund - MINDX
10/31/2005
MINDX
0.54% 3.76% -6.96% -9.83% 11.43% 4.45% 10.56% 9.98%
S&P Bombay Stock Exchange 100 Index
3.82% 5.68% -2.19% -2.48% 15.14% 8.65% 10.72% 10.50%
As of 06/30/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund - MINDX
10/31/2005
MINDX
-5.03% -10.25% -14.84% -9.41% 4.32% 3.02% 9.62% 9.51%
S&P Bombay Stock Exchange 100 Index
-6.63% -12.62% -13.58% -4.50% 6.90% 7.26% 9.37% 9.80%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews India Fund - MINDX
MINDX
18.11% 16.45% -0.88% -10.09% 35.79% -1.23% 0.90% 63.71% -5.90% 31.54%
S&P Bombay Stock Exchange 100 Index
24.08% 13.92% 8.53% -6.00% 41.88% 2.32% -6.41% 31.40% -4.70% 28.62%

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 06/30/2022)

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

  • 1 YEAR
  • 3rd
  • 17 out of 23 funds
  • 3 YEAR
  • 4th
  • 19 out of 21 funds
  • 5 YEAR
  • 4th
  • 17 out of 18 funds
  • 10 YEAR
  • 2nd
  • 7 out of 17 funds
  • SINCE INCEPTION
  • n.a.
  • 1 out of 2 funds

Ratings agency calculation methodology

Portfolio Managers

Peeyush  Mittal, CFA photo
Peeyush Mittal, CFA

Lead Manager

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Co-Manager

Portfolio Characteristics

(as of 06/30/2022)
Fund Benchmark
Number of Positions 52 101
Weighted Average Market Cap $46.2 billion $63.6 billion
Active Share 49.4 n.a.
P/E using FY1 estimates 21.1x 18.8x
P/E using FY2 estimates 17.2x 16.4x
Price/Cash Flow n.a. 14.5
Price/Book 3.6 3.1
Return On Equity 16.3 17.6
EPS Growth (3 Yr) 4.5% 20.5%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 06/30/2022)
-2.02%
Alpha
0.98
Beta
80.46%
Upside Capture
92.48%
Downside Capture
0.15
Sharpe Ratio
-0.43
Information Ratio
6.06%
Tracking Error
94.10

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 08/31/2022)
Name Sector % Net Assets
ICICI Bank, Ltd. Financials 6.8
HDFC Bank, Ltd. Financials 6.7
Bajaj Finance, Ltd. Financials 5.4
Infosys, Ltd. Information Technology 4.8
Shriram City Union Finance, Ltd. Financials 4.0
Reliance Industries, Ltd. Energy 3.8
Tata Consultancy Services, Ltd. Information Technology 3.8
Hindustan Unilever, Ltd. Consumer Staples 3.7
Maruti Suzuki India, Ltd. Consumer Discretionary 3.3
Kotak Mahindra Bank, Ltd. Financials 3.1
TOTAL 45.4

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 06/30/2022)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Financials 36.1 32.6 3.5
Information Technology 14.9 14.2 0.7
Consumer Discretionary 12.2 7.5 4.7
Industrials 8.7 5.6 3.1
Consumer Staples 8.5 9.1 -0.6
Health Care 5.9 3.7 2.2
Energy 5.0 13.1 -8.1
Materials 4.9 7.7 -2.8
Communication Services 1.1 2.8 -1.7
Utilities 0.0 3.3 -3.3
Real Estate 0.0 0.4 -0.4
Cash and Other Assets, Less Liabilities 2.7 0.0 2.7

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 49.0 64.6 -15.6
Large Cap ($10B-$25B) 9.2 18.9 -9.7
Mid Cap ($3B-$10B) 22.2 15.7 6.5
Small Cap (under $3B) 16.8 0.7 16.1
Cash and Other Assets, Less Liabilities 2.7 0.0 2.7

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 $0.26431 $2.55767 $2.82198 9.2% 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 June 30, 2022

For the first half of 2022, the Matthews India Fund returned -14.84% (Investor Class) and -14.77% (Institutional Class), while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned -13.58% over the same period. For the quarter ending June 30, 2022, the Fund returned -10.25% (Investor Class) and -10.19% (Institutional Class), while the benchmark returned -12.62%.

Market Environment:

Rising inflation in developed markets continues to impact investor sentiment negatively while monetary policy tightening is posing a substantial challenge for equity markets globally, India included. Given the aggression the U.S. Federal Reserve has shown toward containing inflation, the Reserve Bank of India has reversed its accommodative stance by hiking policy rates by a cumulative 90 basis point (0.90%) in two separate moves so far this year.

Russia’s war in Ukraine has gone on longer than anyone anticipated. Europe’s dependence on Ukraine for food grain and on Russia for energy implies that the future is going to be challenging from the perspective of securing food and energy supplies. Lack of energy supply-security along with high oil and gas prices has sent power costs soaring in some of the largest European economies and the risk of prolonged recession in the region is increasing with every passing day. Developments in Europe at the very least have negative growth repercussions for global growth.

Against this backdrop India seems to be faring reasonably well though it has its own challenges. The rural economy continues to be weak and thus far has not shown any signs of reversal. High prices of thermal coal along with supply chain issues are beginning to have a negative impact on the financial health of power distribution companies which will have an adverse impact on fiscal math at the state level.

Amid these challenges, discretionary consumption continues to normalize despite rising interest rates. Automotive production in India has improved month-over-month and is helping to boost manufacturing gross domestic product (GDP). Automakers couldn’t produce enough vehicles over the last two years due to chip shortages and that has created a lot of pent-up demand. We expect this trend to sustain in the coming quarters.

Performance Contributors and Detractors:

Our lack of ownership in commodity-led sectors like utilities and underweight in energy detracted from relative performance in the first half. We have historically not focused on these sectors due to our inability to predict underlying commodity prices. On the other hand, our stock selection in financials and industrials were the biggest contributors to relative performance. In the second quarter, Fund performance improved. A reversal in prices of many hard commodities meant that the negative drag we experienced in the first quarter due to lack of ownership in commodity-related sectors switched positively.

At the stock level, industrials and consumer discretionary holdings were among the top performers in the first half. Ashok Leyland, a commercial vehicle manufacturer, was the best performer. Commercial vehicle production in India is expected to see robust growth in fiscal year (FY) 2023 after seeing some stabilization of production in FY2022. Ashok Leyland is a leading manufacturer in the space and is expected to benefit tremendously from improvements in the sector’s production rate. Further, a reduction in the price of copper, aluminum and steel implies that margins are likely going to be better than what investors were anticipating at the start of the fiscal year. Both these developments bode well for continued positive investor sentiment toward Ashok Leyland. On the flip side, information technology (IT) companies were among the biggest detractors in the first six months. Most IT stocks including Infosys didn’t perform well as investors worried about prospects for these businesses given that rampant employee-wage inflation is pressuring their margins and fears are growing of recession in developed markets.  

Notable Portfolio Changes:

In the second quarter, we reduced our holdings in IT stocks like Tech Mahindra. Companies in the sector have benefited from mass adoption of digitization globally and from being insulated from supply chain challenges faced by other sectors. However, the emergence of recession concerns in the U.S. and Europe is going to have a negative impact on the growth outlook for all large Indian IT services firms which derive meaningful revenues come from these markets. Supply-side constraints are also forcing IT services firms to give higher-than-anticipated wage increases to retain employees and that is leading to lower margins compared to long-run averages and investor expectations.

In the quarter we increased our exposure to the auto sector. We initiated a position in TVS Motor which is a leading domestic manufacturer of motorcycles in India. TVS Motor has demonstrated an ability to launch successful new products in both scooter and motorcycle categories and we expect the company to use electrification-related disruption to gain market share in the country. Further, motorcycle demand has been subdued in India for a long time. We expect to see a cyclical recovery in FY2023 from the bottom which would bode well for TVS Motor’s financial performance.

Outlook:

We are beginning to see some light at the end of tunnel as it relates to inflationary pressures around the world. Notwithstanding the efforts central banks are making to tighten monetary policy we have also seen supply chain-led price disruptions for many products and commodities ease in the last few months and that is having a cooling-off effect on commodity prices globally. Two very important industrial commodities—copper and aluminum—are down substantially from recent highs and the same is true for crude oil too. That bodes well from the perspective of an impending reduction in inflation.

We think monetary policy tightening globally has some way to go before it stabilizes. We expect the Reserve Bank of India to follow this path though the impact of the higher rates in the country is unlikely to be as adverse as it may be in developed markets. Interest rates are likely going to normalize back to pre-COVID levels in India and hence we think that the adverse impact of higher rates is likely going to be only marginal.

We continue to be optimistic in our outlook for India. We think there will be a further revival in domestic consumption and we think easing of inflation is going to support that further. We also think discretionary consumption is going to surprise positively given the pent-up demand from last two years. Easing hard commodity prices bodes well for profitability in the consumer discretionary sector and we think it is a good hunting ground for investors to evaluate and invest.

View the Fund’s Top 10 holdings as of June 30, 2022. Current and future holdings are subject to change and risk.

 

Average Annual Total Returns - MINDX as of 06/30/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-9.41% 4.32% 3.02% 9.62% 9.51% 10/31/2005

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 1.10%

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 markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

 

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.