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Matthews Pacific Tiger Fund
MAPTX

Snapshot
  • Seeks alpha in Asia’s emerging economies by capitalizing on the rising Asia consumer
  • High-conviction equity portfolio focused on sustainable growth companies
  • All-cap fundamental approach driven by on-the-ground, proprietary research

09/12/1994

Inception Date

-18.99%

YTD Return

(as of 12/05/2022)

$22.31

NAV

(as of 12/05/2022)

-0.06

1 Day NAV Change

(as of 12/05/2022)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Pacific Tiger 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 Ex Japan. 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 09/12/1994
Fund Assets $3.88 billion (10/31/2022)
Currency USD
Ticker MAPTX
Cusip 577-130-107
Portfolio Turnover 46.6%
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia Ex Japan - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region, excluding Japan
Fees & Expenses
Gross Expense Ratio 1.06%
Net Expense Ratio 1.03%

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 Pacific Tiger Fund - MAPTX
09/12/1994
MAPTX
-8.08% -19.00% -33.44% -35.42% -4.56% -2.93% 3.03% 6.84%
MSCI All Country Asia ex Japan Index
-6.09% -18.02% -32.03% -33.74% -4.51% -3.05% 2.70% 3.44%
As of 09/30/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund - MAPTX
09/12/1994
MAPTX
-12.08% -12.81% -27.60% -27.73% -1.53% -0.48% 3.93% 7.18%
MSCI All Country Asia ex Japan Index
-12.73% -13.69% -27.62% -28.48% -1.03% -0.91% 3.32% 3.69%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Pacific Tiger Fund - MAPTX
MAPTX
-4.41% 28.83% 10.72% -11.11% 39.96% -0.16% -1.30% 11.79% 3.63% 21.00%
MSCI All Country Asia ex Japan Index
-4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70%

MSCI AC Asia ex Japan Index since inception value calculated from 08/31/94.

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 52 funds
  • 3 YEAR
  • out of 52 funds
  • 5 YEAR
  • out of 47 funds
  • 10 YEAR
  • out of 35 funds
  • 1 YEAR
  • 2nd
  • 12 out of 36 funds
  • 3 YEAR
  • 2nd
  • 18 out of 35 funds
  • 5 YEAR
  • 3rd
  • 18 out of 31 funds
  • 10 YEAR
  • 1st
  • 5 out of 21 funds
  • SINCE INCEPTION
  • 2nd
  • 2 out of 5 funds

Ratings agency calculation methodology

Portfolio Managers

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Lead Manager

Inbok  Song photo
Inbok Song

Lead Manager

Winnie  Chwang photo
Winnie Chwang

Co-Manager

Andrew  Mattock, CFA photo
Andrew Mattock, CFA

Co-Manager

Portfolio Characteristics

(as of 09/30/2022)
Fund Benchmark
Number of Positions 59 1,205
Weighted Average Market Cap $82.6 billion $86.3 billion
Active Share 69.3 n.a.
P/E using FY1 estimates 17.8x 10.7x
P/E using FY2 estimates 15.5x 10.2x
Price/Cash Flow 12.8 6.3
Price/Book 2.8 1.4
Return On Equity 15.9 14.6
EPS Growth (3 Yr) 8.4% 11.4%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 09/30/2022)
-0.35%
Alpha
1.01
Beta
93.62%
Upside Capture
97.76%
Downside Capture
-0.11
Sharpe Ratio
-0.09
Information Ratio
5.37%
Tracking Error
92.04

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
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 6.8
Samsung Electronics Co., Ltd. Information Technology South Korea 4.5
Central Pattana Public Co., Ltd. Real Estate Thailand 3.6
Tencent Holdings, Ltd. Communication Services China/Hong Kong 3.5
ICICI Bank, Ltd. Financials India 3.5
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 3.3
Meituan Consumer Discretionary China/Hong Kong 3.1
Yum China Holdings, Inc. Consumer Discretionary China/Hong Kong 2.9
CITIC Securities Co., Ltd. Financials China/Hong Kong 2.8
PT Bank Central Asia Tbk Financials Indonesia 2.7
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 09/30/2022)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 19.8 15.1 4.7
Information Technology 19.0 20.8 -1.8
Financials 15.8 21.1 -5.3
Consumer Staples 9.8 5.8 4.0
Industrials 9.7 6.7 3.0
Real Estate 7.7 4.1 3.6
Communication Services 5.8 9.7 -3.9
Materials 3.6 5.5 -1.9
Health Care 2.9 3.9 -1.0
Utilities 2.9 3.3 -0.4
Energy 0.0 3.9 -3.9
Cash and Other Assets, Less Liabilities 3.1 0.0 3.1

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

Country Fund Benchmark Difference
China/Hong Kong 43.3 43.3 0.0
India 17.3 17.5 -0.2
Taiwan 14.2 15.6 -1.4
South Korea 8.2 12.2 -4.0
Indonesia 3.9 2.5 1.4
Thailand 3.7 2.4 1.3
Singapore 2.7 3.9 -1.2
Philippines 2.2 0.8 1.4
Vietnam 1.3 0.0 1.3
Malaysia 0.0 1.7 -1.7
Cash and Other Assets, Less Liabilities 3.1 0.0 3.1

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 46.8 56.1 -9.3
Large Cap ($10B-$25B) 23.2 21.0 2.2
Mid Cap ($3B-$10B) 21.9 19.3 2.6
Small Cap (under $3B) 5.0 3.5 1.5
Cash and Other Assets, Less Liabilities 3.1 0.0 3.1

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 $0.50110 $5.35902 $5.86012 17.4% 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 Pacific Tiger Fund returned -12.81% (Investor Class) and -12.74% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index returned -13.69%.

Market Environment:

The third quarter was negative across emerging and Asian equity markets, and they fell victim to a confluence of actions including the U.S. FED’s increased hawkishness, China’s zero-COVID policy, geopolitical tensions and fear of a tightening-led slowdown in global growth. The Asian region’s weakness was led by China as investors continue to wrestle with the uncertainty arising from zero-COVD policy and worries about a spillover of the county’s real estate woes into its broader economy. South Korea and Taiwan fell in sympathy with some of the global concerns around economic growth and a slowdown in the IT hardware sector. All sector indices were negative for the quarter.

Asian currencies also depreciated but it seems to be more of a case of a stronger U.S. dollar. On a trade-weighted basis, Asian currencies are still proving to be resilient barring the South Korean won as the country struggles to manage inflation and weakening current account.

Foreign investor flows have remained negative for the year with the exception of some of the smaller markets in the region like Thailand and Indonesia.

Performance Contributors and Detractors:

From a country perspective, India was the biggest contributor to the portfolio’s absolute performance driven by continuous strong demand in real estate, consumer discretionary and financials sectors. Taiwan was among the top contributors on a relative basis helped by positive stock selection effect in the information technology sector. On the other hand, stock selection in South Korea, especially in the battery materials sector, detracted the most from relative performance.

From a sector perspective, stock selection in the consumer discretionary, consumer staples and information technology sectors contributed the most to relative performance while stock selection in the industrials sector and the portfolio’s zero exposure to the energy sector detracted the most from relative performance.

Turning to individual securities, one of the portfolio’s longstanding holdings, India-based Titan Company, which manufactures fashion accessories, strengthened its moat by reinforcing trust and transparency in its branded jewelry business which is allowing the company to gain market share from mom-and-pops. Fast-food restaurant company Yum China was relatively defensive within the consumer discretionary sector. Though domestic consumption recovery has been non-linear with China’s dynamic zero-COVID policy, the company was able to improve same store sales growth via strong execution through online delivery, appropriate quarantine measures for store employees and continued store openings. On the other hand, South Korea-based SK IE Technology and Singapore-based SATS were two notable detractors to performance due to company specific issues. Delayed ramp up of the initial production of the battery component for SK IE technology and a large size acquisition to change balance sheet profile for SATS were major culprits for their underperformance.

Notable Portfolio Changes:

During the quarter, we took advantage of market volatility to rotate capital and make adjustments to the portfolio. We continue to find opportunities in China/Hong Kong market and initiated positions in a Chinese real estate company KE Holdings, a housing transaction platform provider. Although the Chinese property market is undergoing a difficult period catalysed by the government’s deleveraging policies, the company is emerging as a significant sales platform for not only new homes but increasingly, used homes which is well aligned with the healthy development of the China property market in the long run. We also initiated a position in Pinduoduo, a consumer discretionary platform company. We believe Pinduoduo is positioned as a leader in the development of e-commerce in lower-tier cities in China and provides more “value for money” products to consumers. The company’s ability to drive operational leverage may continue to surprise investors as there is an increasing emphasis on quality of growth. Valuation of these companies are more favorable compared to their history, and more so based on the future prospect of profitable growth in our view. New positions were funded by rotating capital out of holdings in South Korea, Taiwan and India.

Outlook:

The bulk of the weakness across the region has been driven by a compression in valuation, but there has also been some erosion in earnings—most notably in China although (at the time of writing) analysts are still projecting some EPS growth for C2022. The consumer sector in China has felt the brunt of the country’s zero-COVID policy, and the impact on platform type business models has been further exacerbated by regulatory impact. Companies listed in the onshore (mainland) market in China are proving to be slightly more resilient due to the diversity in business models. Across the rest of the region, credit growth in India hit a near-term peak, and the trend in earnings is still holding up but valuations remain a reason to rotate capital away. The Asian region may be able to cope with some of the challenges faced by global economy due to a relatively better macro-backdrop compared to prior periods of the U.S. dollar strength. With valuations becoming more attractive, the portfolio management team is continuously looking for business models that have the staying power to deliver growth for the next many years.

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

Average Annual Total Returns - MAPTX as of 09/30/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-27.73% -1.53% -0.48% 3.93% 7.18% 09/12/1994

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 1.06%
Net Expense Ratio 1.03%

Matthews has contractually agreed to waive fees and reimburse expenses to limit the Total Annual Fund Operating Expenses until April 30, 2023. Please see the Fund’s prospectus for additional details.

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.