Snapshot
- Total return strategy seeks to access the growth of Asia Pacific with lower volatility
- Unconstrained all-cap portfolio with a quality bias
- Flexible approach offers participation in both growth and value markets
10/31/2006
Inception Date
-0.48%
YTD Return
(as of 05/31/2023)
$13.13
NAV
(as of 05/31/2023)
-0.09
1 Day NAV Change
(as of 05/31/2023)
Total return with an emphasis on providing current income.
Under normal circumstances, the Matthews Asia Dividend Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in dividend-paying equity securities of companies located in Asia. The Fund may also invest in convertible debt and equity securities. The Fund seeks to provide a level of current income that is higher than the yield generally available in Asian equity markets over the long term.
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. There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.
These and other risks associated with investing in the Fund can be found in the prospectus.
Inception Date | 10/31/2006 | |
Fund Assets | $1.67 billion (04/30/2023) | |
Currency | USD | |
Ticker | MAPIX | |
Cusip | 577-125-107 | |
Portfolio Turnover | 50.8% | |
Benchmark | MSCI All Country Asia Pacific Index | |
Geographic Focus | Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region |
Gross Expense Ratio | 1.10% |
Objective | Total return with an emphasis on providing current income. |
Strategy | Under normal circumstances, the Matthews Asia Dividend Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in dividend-paying equity securities of companies located in Asia. The Fund may also invest in convertible debt and equity securities. The Fund seeks to provide a level of current income that is higher than the yield generally available in Asian equity markets over the long term. |
Risks |
Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging and frontier markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets.
There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.
The risks associated with investing in the Fund can be found in the prospectus |
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
30-Day SEC Yield | 1.64% |
30-Day SEC Yield (excluding expense waiver) | 1.64% |
Dividend Yield | 2.75% |
30-Day SEC Yield Source: BNY Mellon Investment Servicing (US) Inc.
Lead Manager
Chief Investment Officer and Portfolio Manager
Robert Horrocks is Chief Investment Officer and Portfolio Manager at Matthews and has been a Matthews Asia Funds Trustee since 2018. He manages the firm’s Asian Growth and Income and Asia Dividend Strategy and co-manages the Asia ex Japan Total Return Equity Strategy. As Chief Investment Officer, Robert oversees the firm’s investment process and investment professionals and sets the research agenda for the investment team. Before joining Matthews in 2008, Robert was Head of Research at Mirae Asset Management in Hong Kong. From 2003 to 2006, Robert served as Chief Investment Officer for Everbright Pramerica in China, establishing its quantitative investment process. He started his career as a Research Analyst with WI Carr Securities in Hong Kong before moving on to spend eight years working in several different Asian jurisdictions for Schroders, including stints as Country General Manager in Taiwan, Deputy Chief Investment Officer in Korea and Designated Chief Investment Officer in Shanghai. Robert earned his PhD in Chinese Economic History from Leeds University in the United Kingdom, and is fluent in Mandarin.
Lead Manager
Portfolio Manager
Kenneth Lowe is a Portfolio Manager at Matthews and manages the firm’s Asian Growth and Income, Asia Dividend and the Asia ex Japan Total Return Equity Strategies. Prior to joining Matthews in 2010, he was an Investment Manager on the Asia and Global Emerging Market Equities Team at Martin Currie Investment Management in Edinburgh, Scotland. Kenneth received an M.A. in Mathematics and Economics from the University of Glasgow.
Co-Manager
Portfolio Manager
Elli Lee is a Portfolio Manager at Matthews and manages the firm’s Korea Strategy and co-manages the Asia Dividend, China Dividend and Asian Growth and Income Strategies. Prior to joining Matthews in 2016, Elli worked at Bank of America Merrill Lynch for 10 years, most recently in Korean Equity Sales and previously as an Equity Research Analyst covering South Korea’s engineering, construction, steel and education sectors. From 2003 to 2005, Elli was an Investor Relations Specialist at Hana Financial Group in Seoul. She earned a Master of Science in Global Finance from the Hong Kong University of Science and Technology Business School and New York University Stern School of Business, and received a B.A. in Economics from Bates College. Elli is fluent in Korean.
Co-Manager
Portfolio Manager
Siddharth Bhargava is a Portfolio Manager at Matthews and co-manages the firm’s Asian Growth and Income and Asia Dividend Strategies. Prior to joining Matthews in 2011, he was an Investment Analyst at Navigator Capital. Siddharth also served as a credit and debt market research assistant to Dr. Edward Altman at the New York University Salomon Center. From 2005 to 2008, he was a Credit Analyst at Sandell Asset Management. Siddharth received a B.A. in Economics from the University of Virginia and an MBA from the Stern School of Business at New York University. He is fluent in Hindi and conversational in German.
Co-Manager
Portfolio Manager
Winnie Chwang is a Portfolio Manager at Matthews and manages the firm’s China Small Companies and China Dividend Strategies and co-manages the China, Pacific Tiger and Asia Dividend Strategies. She joined the firm in 2004 and has built her investment career at the firm. Winnie earned an MBA from the Haas School of Business and received her B.A. in Economics with a minor in Business Administration from the University of California, Berkeley. She is fluent in Mandarin and conversational in Cantonese.
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 ending March 31, 2023, the Matthews Asia Dividend Fund returned 2.85% (Investor Class) and 2.89% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 4.85% over the same period.
Market Environment:
The Asia Pacific region continued to recover in the first quarter with strength relatively broad based across markets as it appears that the U.S. dollar has begun to peak out. A reopening China moved higher as COVID restrictions were removed, as the property sector began to recover with easing liquidity, and as there is a low base for comparable earnings this year. Japan gained with cyclicals in areas like information technology and industrials rallying while Taiwan and South Korea moved higher as there is an ongoing inventory digestion in the technology sector.
India was a major exception as markets fell having entered the year at lofty valuations and as economic growth disappoints already high expectations. The domestic Hong Kong market also struggled as the pivotal property market remains weak and as exports declined markedly.
Performance Contributors and Detractors:
From a country perspective, stock selection in Japan was one of the largest detractors to relative performance during the quarter amid rallies in more cyclical areas that the portfolio is underweight in. Similarly, stock selection in China/Hong Kong detracted as select state-owned enterprises and reopening plays where the portfolio has limited exposure gained while poor earnings delivery from certain holdings hindered performance. Conversely, the portfolio benefited from positive stock selection in Australia because of solid earnings delivery from holdings and an underweight to banks.
At the sector level, stock selections in industrials and consumer discretionary were large detractors. In the case of the latter, disappointing earnings delivery came from certain portfolio holdings in domestic China/Hong Kong. On the other hand, financials was a top contributor as limited exposure to specific areas of commercial banks helped alongside a recovery in Asia Commercial Bank in Vietnam. Underweights to the energy and utilities sectors also boosted relative performance.
Among individual holdings, the bottom contributor was JD.com as the e-commerce platform fell following concerns that its new subsidy regime for customers will impact margins while the overall market remains competitive. Chinese life science service company Pharmaron Beijing dropped as its controlling shareholders are looking to reduce their stake while earnings disappointed with biologics, cell gene therapy and new overseas manufacturing capabilities hampering profitability. Indian auto parts company Uno Minda also detracted from portfolio returns as, despite solid earnings growth, an expensive valuation of over 40x P/E and high capital expenditure plans may have weighed.
Conversely, Chinese internet platforms Alibaba and Tencent were the top contributors to the portfolio during the quarter. Alibaba gained as its cheap valuation was accompanied by a return to earnings growth with losses in local consumer services, international e-commerce and digital media all narrowing. We exited our position during the quarter given the stock’s lack of dividend and our preference for other internet platforms in China. Tencent rallied as its games offerings were more resilient than feared while advertising revenues are recovering and it further improved its ecosystem in areas like video. Australian education provider IDP Education moved higher as growth remains strong for the company as English language teaching and student placement services bounce back.
Notable Portfolio Changes:
In the first quarter, we initiated a significant number of new positions in the portfolio and funded these through exiting a large portion of the portfolio that we entered the year with. This created far greater turnover in the portfolio than we would anticipate going forward as we are long-term investors that believe that patience is an important component to returns.
At a country level, these alterations resulted in a major reduction in Vietnam and China, with increases in Japan, Hong Kong and Taiwan. At a sector level, consumer discretionary has been meaningfully reduced alongside industrials, with financials, information technology and consumer staples all rising.
We have attempted to increase the overall portfolio dividend yield, improve the average quality of companies held, and reduce volatility while maintaining sustainable growth following disappointing performance in recent times for the portfolio. As an example, we have included what we deem to be leading businesses with visible growth at reasonable prices, such as AIA Group, Delta Electronics, Keyence, HDFC Ltd., Tata Consultancy Services, Yili, Yum China, and CSL Ltd. To fund this, exits have been made in lower quality businesses such as Kido Group and IHI Corp., non-dividend payers such as Alibaba and Baidu, and overly expensive holdings such as IDP Education and Rakus.
Outlook:
A return to stronger growth for the Chinese economy and company earnings is likely this year. The government has attempted to take a more pro-growth and pro-business stance in policy making and this should help alongside the benefits of reopening and a low base effect. Further, relatively low inflation allows for more policy easing if required. In Japan, questions remain around how sticky inflation is likely to be, particularly as spring wage negotiations may have created a jump in salaries. This has potential implications for yield curve control policies and nominal growth while there is also talk of improving capital efficiency among lowly-valued companies. More broadly, a possible peak in the U.S. dollar may be upon us while valuations for the Asian Pacific region are a relatively modest 13.2x P/E*. These are reasonably supportive factors, however, the increased possibility of a recession in the U.S. driven by the monetary tightening cycle does raise the prospect of general risk aversion and weaker exports. Against what may remain a volatile backdrop, we believe that a quality approach that balances dividend yields and dividend growth should enable the portfolio to deliver for clients over the cycle.
Top 10 holdings as of March 31, 2023. Current and future holdings are subject to change and risk.
*Valuation as of April 6, 2023
Average Annual Total Returns - MAPIX 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
Yields as of 03/31/2023
The 30-Day SEC Yield represents net investment income earned by the Fund over the 30-day period ended 03/31/2023, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day SEC Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate. Source: BNY Mellon Investment Servicing (US) Inc.
Dividend Yield (trailing) is the weighted average sum of the dividends paid by each equity security held by the Fund over the last 12 months divided by the current price as of report date. The annualised dividend yield is for the equity-only portion of the Fund and does not reflect the actual yield an investor in the Fund would receive. There can be no guarantee that companies that the Fund invests in, and which have historically paid dividends, will continue to pay them or to pay them at the current rates in the future. A positive distribution yield does not imply positive return, and past yields are no guarantee of future yields.
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. There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.
There is no guarantee that a company will pay or continue to increase dividends. Past performance is no guarantee of future results.