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Asia Growth

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

3.52%

YTD Return

(as of 06/11/2021)

$40.83

Price

(as of 06/11/2021)

$2.28 billion

Fund Assets

(as of 05/31/2021)

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.

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

Fund Facts
Inception Date 10/31/2003
Fund Assets $2.28 billion (05/31/2021)
Currency USD
Ticker MPACX
Cusip 577-130-867
Portfolio Turnover 42.8%
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
Fees & Expenses
Gross Expense Ratio 1.08%

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 Growth Fund
MPACX
1.49% -4.76% 0.05% 46.99% 13.20% 16.80% 10.26% 10.87% 10/31/2003
MSCI All Country Asia Pacific Index
1.50% 1.88% 5.42% 42.07% 9.54% 13.06% 7.23% 8.06%
As of 03/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund
MPACX
-6.61% -1.90% -1.90% 73.85% 12.95% 16.54% 10.49% 10.86% 10/31/2003
MSCI All Country Asia Pacific Index
-1.03% 2.42% 2.42% 52.20% 8.49% 12.52% 7.00% 7.96%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews Asia Growth Fund
MPACX
46.76% 26.18% -16.25% 39.39% 0.92% -0.05% 1.49% 19.35% 17.47% -12.70%
MSCI All Country Asia Pacific Index
20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29% 12.19% 17.05% -14.92%

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 14 funds
  • 3 YEAR
  • out of 14 funds
  • 5 YEAR
  • out of 13 funds
  • 10 YEAR
  • out of 11 funds
  • 1 YEAR
  • 1st
  • 5 out of 28 funds
  • 3 YEAR
  • 1st
  • 5 out of 28 funds
  • 5 YEAR
  • 1st
  • 2 out of 25 funds
  • 10 YEAR
  • 1st
  • 4 out of 16 funds
  • SINCE INCEPTION
  • 1st
  • 2 out of 10 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 03/31/2021)
71
Number of Securities

Source: BNY Mellon Investment Servicing (US) Inc.

29.2x
P/E using FY1 estimates
27.7x
P/E using FY2 estimates
$60.6 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 05/31/2021)
Name Sector Country % Net Assets
Bilibili, Inc. Communication Services China/Hong Kong 5.5
Wuxi Biologics Cayman, Inc. Health Care China/Hong Kong 5.4
Innovent Biologics, Inc. Health Care China/Hong Kong 3.5
BeiGene, Ltd. Health Care China/Hong Kong 3.5
Sony Group Corp. Consumer Discretionary Japan 3.4
Shenzhou International Group Holdings, Ltd. Consumer Discretionary China/Hong Kong 2.7
HDFC Bank, Ltd. Financials India 2.6
PT Bank Rakyat Indonesia Persero Financials Indonesia 2.6
XPeng, Inc. Consumer Discretionary China/Hong Kong 2.6
Bajaj Finance, Ltd. Financials India 2.2
TOTAL 34.0

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 $0.15061 $0.16831 $1.39495 $1.71387 4.6% 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 Growth Fund returned -1.90% (Investor Class) and -1.88% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 2.42%.

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. Japan’s markets also experienced some volatility in the quarter, but ultimately ended the period with slightly positive returns. The uptick in global economic activity is broadly positive for Japan’s economy, which has a significant export sector. 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.

Performance Contributors and Detractors:

Detractors in the quarter were largely stock specific, centering around three small positions. Cloopen Group Holding is a Chinese data center and software company whose earnings were weaker than the market expected following its recent IPO. AI inside is a Japanese AI company that recently announced a change in their business strategy, dampening investor sentiment. And Frequency Therapeutics, which focused on regenerative medicine to cure hearing loss, did not meet the much expected end point of its phase two clinical study. Each company experienced significant stock price declines in the quarter. While these outcomes were disappointing, the position sizes of these three stocks was small by design. We tend to keep positions in higher risk, early stage companies small until these companies begin meeting their stated goals and milestones. We exited AI inside and Frequency Therapeutics in the quarter and continue to monitor Cloopen Group Holdings.

Contributors in the quarter were also stock specific, including Bilibili, BeiGene and Shimao Services Holdings. Chinese video content company Bilibili, which caters to young viewers, attracted new users as the pandemic accelerated demand for online entertainment and social media interaction. We see Bilibili emerging as a new, distinct social media platform in its own right. Beigene is a Chinese health care company focusing on cancer treatments. The company is becoming better known among investors across Asia and continues to execute well on its core business model. Shimao Services Holdings is a Chinese real estate property management company. We purchased the company at attractive valuations at the IPO in October 2020 and the stock may have benefited from investors interest in stable, cash-flow generative businesses amid the volatility of the quarter.

Notable Portfolio Changes:

During the quarter, we rotated capital a bit, expanding our weight in India. Becoming more constructive on India’s equity markets in general, we initiated new positions in two Indian consumer staples companies. Avenue Supermarts runs grocery stores, department stores and hypermarkets throughout India. Dabur India is a leading manufacturer of personal care products, including Ayurvedic medicine and natural consumer products. Both are well positioned in our view to capture a greater share of consumer spending. With these new additions, the portfolio now has six positions in India. We also initiated a new position in Japanese semiconductor equipment company Advantest Corp. Along with prior holdings Taiwan Semiconductor Manufacturing Co (TSMC) and Shin-Etsu Chemical, we now hold three holdings in the semiconductor space. Against the current backdrop of an overall computer chip shortage globally, all three companies may be well positioned for long-term growth. Two key trends in this space we are following include ever-increasing capital intensity of the whole semiconductor industry and ever-expanding amount of testing needed for fabricating computer chips.

Outlook:

Looking ahead, we are focusing on both cyclical and structural growth opportunities. Health care falls into the structural side of the opportunity set, in our view. The fortunes of health care companies tend to have little to do with macroeconomics and much more to do with maintaining strong pipelines of innovative new products and delivering strong value to their customers and shareholders. We expect to maintain our overweight in the health care sector, as it can provide both growth and ballast over time.

While market benchmarks demonstrated a brief rotation toward value stocks in recent months, we expect that future market gains may be more broad-based. Cyclical growth trends should pick up the pace in our view: growth in areas such as semiconductors, industrials and real manufacturing companies may continue. The pace of the global economic recovery and the size of some government stimulus packages have the potential to create inflation risks, although inflation to date has remained in check.

Trade tensions between the U.S. and China are unlikely to fade, but they may also be less likely to escalate under the new U.S. administration. China’s domestic economy has enjoyed a strong V-shaped recovery based on keeping the pandemic in check. Normal daily foot traffic has largely resumed in China. Elsewhere in the region, Japan may be well positioned to benefit from a global, cyclical recovery. Strong in industrials and exports, Japan’s economy may be buoyed by any pick up in global trade. As always, we remained engaged in fundamental, bottom-up research—company by company, stock by stock—to identify attractive growth opportunities throughout the region.

 

As of 3/31/21, the securities mentioned comprised the Matthews Asia Growth Fund in the following percentages: Cloopen Group Holding, Ltd. ADR, 0.6%; Bilibili, Inc. ADR, 5.5%; BeiGene, Ltd. ADR, 3.5%; Shimao Services Holdings, Ltd., 1.7%; Avenue Supermarts, Ltd., 1.4%; Dabur India, Ltd., 1.2%; Advantest Corp., 1.5%; Taiwan Semiconductor Manufacturing Co., Ltd. ADR, 1.9%; Shin-Etsu Chemical Co., Ltd., 1.5%. The Fund held no positions in AI inside or Frequency Therapeutics. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MPACX as of 03/31/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
73.85% 12.95% 16.54% 10.49% 10.86% 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 1.08%

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.