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Asia Growth

Matthews Asia ESG Fund MASGX

Snapshot
  • Unconstrained strategy focused on companies that make a positive environmental, social and eco­nomic impact in Asia ex Japan
  • Deep bottom-up fundamental approach with bias toward mid- and small-capitalization companies whose ESG qualities are less appreciated
  • Seeks to generate attractive long-term risk-adjusted returns by investing in well-governed companies

04/30/2015

Inception Date

12.72%

YTD Return

(as of 06/11/2021)

$16.84

Price

(as of 06/11/2021)

$107.39 million

Fund Assets

(as of 05/31/2021)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Asia ESG 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 of any market capitalization located in Asia that Matthews believes satisfy one or more of its environmental, social and governance (“ESG”) standards. The Fund seeks to invest in companies across the market capitalization spectrum that Matthews believes to be undervalued but of high quality and run by management teams with good operating and governance track records. In addition, the Fund seeks to invest in those Asian companies that have the potential to profit from the long-term opportunities presented by global environmental and social challenges as well as those Asian companies that proactively manage long-term risks presented by these challenges.

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. Matthews Asia ESG Fund’s consideration of ESG factors in making its investment decisions may impact the Fund’s relative investment performance positively or negatively.

The risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 04/30/2015
Fund Assets $107.39 million (05/31/2021)
Currency USD
Ticker MASGX
Cusip 577-130-727
Portfolio Turnover 84.6%
Benchmark MSCI All Country Asia ex Japan 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 1.42%
Net Expense Ratio 1.38%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 05/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ESG Fund
MASGX
2.24% 0.92% 9.97% 77.46% 17.11% 16.80% n.a. 11.62% 04/30/2015
MSCI All Country Asia ex Japan Index
1.23% 1.13% 6.61% 51.96% 10.77% 15.47% n.a. 8.63%
As of 03/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ESG Fund
MASGX
-3.62% 5.02% 5.02% 96.51% 14.40% 15.60% n.a. 11.09% 04/30/2015
MSCI All Country Asia ex Japan Index
-2.52% 2.75% 2.75% 57.77% 9.20% 14.12% n.a. 8.21%
For the years ended December 31st
Name 2020 2019 2018 2017 2016
Matthews Asia ESG Fund
MASGX
42.87% 12.55% -9.73% 33.79% -1.40%
MSCI All Country Asia ex Japan Index
25.36% 18.52% -14.12% 42.08% 5.76%

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 03/31/2021)

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 56 funds
  • 3 YEAR
  • out of 56 funds
  • 5 YEAR
  • out of 50 funds
  • 1 YEAR
  • 1st
  • 2 out of 28 funds
  • 3 YEAR
  • 1st
  • 2 out of 28 funds
  • 5 YEAR
  • 1st
  • 5 out of 25 funds
  • SINCE INCEPTION
  • 1st
  • 6 out of 25 funds

Ratings agency calculation methodology

Portfolio Managers

Vivek  Tanneeru photo
Vivek Tanneeru

Lead Manager

Portfolio Characteristics

(as of 03/31/2021)
53
Number of Securities

Source: BNY Mellon Investment Servicing (US) Inc.

21.1x
P/E using FY1 estimates
15.6x
P/E using FY2 estimates
$30.0 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 05/31/2021)
Name Sector Country % Net Assets
Shriram City Union Finance, Ltd. Financials India 6.3
Samsung SDI Co., Ltd., Pfd. Information Technology South Korea 6.2
Hong Kong Exchanges & Clearing, Ltd. Financials China/Hong Kong 5.0
IndusInd Bank, Ltd. Financials India 3.9
Bandhan Bank, Ltd. Financials India 3.8
Phoenix Mills, Ltd. Real Estate India 3.3
Legend Biotech Corp. Health Care United States 3.1
Micron Technology, Inc. Information Technology United States 2.6
BRAC Bank, Ltd. Financials Bangladesh 2.6
Andes Technology Corp. Information Technology Taiwan 2.5
TOTAL 39.3

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 03/31/2021)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure

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.

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)
12/15/2020 12/16/2020 $0.00950 $0.39961 $0.43641 $0.84552 6.0% 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 March 31, 2021

For the quarter ending March 31, 2021, the Matthews Asia ESG Fund returned 5.02% (Investor Class) and 5.03% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 2.75%.

Market Environment:

In January and early February, North Asia equities continued to climb, leading the region with strong absolute performance. However, in the middle of February, Asia equity prices became more volatile as growth prospects and talks of U.S. stimulus led to a spike in U.S. Treasury rates. The U.S. dollar strengthened and commodity prices grinded higher causing analysts to speculate about higher inflation. Stocks associated with a cyclical recovery and value-oriented companies outperformed growth stocks. Cyclical sectors like energy, materials, real estate and financials performed well while health care and consumer stocks lagged. By the end of the quarter, Asian large caps and growth stocks suffered the most while small caps and lower quality, cyclically oriented stocks rallied the most.

Chinese equities were particularly volatile in the quarter. During the first six weeks of the reporting period, Chinese equities rose amid the transition of power to a Biden administration and persistent upward revisions to 2021 consensus earnings and GDP growth estimates. China’s broader markets then weakened, ending the quarter slightly negative, led by selling among Chinese retail investors. Meanwhile, Indian equities were a brighter spot in the region. Proposed government spending is favorable for growth. In addition, India’s current account has switched from deficit to surplus as foreign exchange reserves have grown.

From an environmental, social and governance (ESG) perspective, markets were keenly focused on the details of China’s 14th Five Year plan and the Biden administration’s infrastructure plan, both of which didn’t disappoint with their emphasis on renewable energy and sustainable infrastructure.

Performance Contributors and Detractors:

Samsung SDI, a South Korean battery maker, was a notable contributor during the quarter. The market took a view that Samsung SDI, a current prismatic cell supplier to Volkswagen (VW), would benefit from VW’s reliance on prismatic form factors for the majority of its future battery needs when the company detailed its ambitious plans for ramping up electric vehicle (EV) production over the coming decade. On the other hand, Flat glass, a leading solar glassmaker in China, detracted from performance. Following a strong run-up in share price in 2020, the company’s stock fell a bit in the first quarter as investors took profits. However, we remain constructive on Flat glass, as the company continues to execute well and is rapidly expanding its capacity over the coming quarters. We expect the company to continue to benefit from the long-term demand and attractive margin profile in the future driven by its scale and operational excellence.

Notable Portfolio Changes:

During the quarter, we initiated a position in Bank Tabungan Negara, an Indonesian mortgage lender. Bank Tabungan is a leader in the lower-income mortgage lending. After a six-year downturn in the Indonesian property market, we think conditions are looking conducive to a rebound driven by pent up demand, very favorable regulatory changes, lower rates, better affordability and prospects of strong recovery post-COVID. We believe the company is well positioned to benefit from those trends and also from strong recovery in profitability driven by credit cost normalization. During the quarter, we also exited some small positions such as Bank Rakyat Indonesia and Keppel DC REIT as we found more attractive investment opportunities elsewhere and consolidated our holdings.

Outlook:

Looking ahead, earnings growth, liquidity and valuations all appear supportive of Asia’s equity markets. We expect strong corporate earnings across Asia in 2021 as the global recovery continues to expand. Across the region we see sufficient liquidity. While we have not seen as much uptake in credit, any pick up in credit issuance should further support economic growth. Across the region, we see a return to normalcy, leading to better economic prospects for businesses. Parts of Asia have progressed from recovery to expansion, while others like India and Indonesia are still getting back to pre-pandemic levels of activity. Some of the economic indicators in India are pointing to a steady improvement but we await confirmation of the trend in stronger credit activity.

For investors interested in ESG themes, such as reducing carbon emissions, alleviating poverty and creating greater financial inclusion in the developing world, Asia remains an important investment destination, in our view. To tackle these themes globally, we believe we need to include the world’s most populous economies, many of which lie in Asia. As the global economy returns to strength, we also find attractive opportunities for alpha generation throughout our large, diverse investment universe.

 

As of 3/31/21, the securities mentioned comprised the Matthews Asia ESG Fund in the following percentages: Samsung SDI Co., Ltd., Pfd., 7.3%; Flat Glass Group Co., Ltd. H Shares, 1.2%; PT Bank Tabungan Negara Persero, 1.6%. The Fund held no positions in Volkswagen AG, Bank Rakyat Indonesia and Keppel DC REIT. Current and future holdings are subject to change and risk. Earnings growth is not representative of the Fund’s future performance.

Average Annual Total Returns - MASGX as of 03/31/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
96.51% 14.40% 15.60% N.A. 11.09% 04/30/2015

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 1.42%
Net Expense Ratio 1.38%

Matthews has contractually agreed to waive fees and reimburse expenses to limit the Total Annual Fund Operating Expenses until April 30, 2022. 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. Matthews Asia ESG Fund’s consideration of ESG factors in making its investment decisions may impact the Fund’s relative investment performance positively or negatively.

 

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.