12/27/1999
Inception Date
11.57%
YTD Return
(as of 01/19/2021)
$29.79
Price
(as of 01/19/2021)
$1.73 billion
Fund Assets
(as of 12/31/2020)
Long-term capital appreciation
Under normal circumstances, the Matthews Asia Innovators 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 that Matthews believes are innovators in their products, services, processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets. 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.
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. Sector funds may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific sector. The Fund's value may be affected by changes in the science and technology-related industries.
The risks associated with investing in the Fund can be found in the prospectus.
| Inception Date | 12/27/1999 | |
| Fund Assets | $1.73 billion (12/31/2020) | |
| Currency | USD | |
| Ticker | MATFX | |
| Cusip | 577-130-883 | |
| Portfolio Turnover | 80.10% | |
| Benchmark | MSCI All Country Asia ex Japan Index | |
| Geographic Focus | Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region | |
| Gross Expense Ratio | 1.19% | |
MSCI AC Asia Ex Japan Index since inception value calculated from 12/31/99.
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
Ratings (as of 12/31/2020)
CATEGORY: Pacific/Asia ex-Japan Stk
Quartile & Rankings (as of 12/31/2020)
CATEGORY: Pacific Ex Japan Funds
Ratings agency calculation methodology
Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.
The Overall Morningstar® Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.
Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
Lipper Analytical Services, Inc., rankings are based on total return, including reinvestment of dividends and capital gains for the stated periods. Funds are assigned a rank within a universe of funds similar in investment objective as determined by Lipper. For the absolute rankings shown the lower the number rank, the better the Fund performed compared to other funds in the classification group. Lipper also calculates a quartile ranking which divides the peer group into quartiles to identify funds of similar quality. Funds in the 1st or 2nd quartile had outperformed the average fund in the peer group while funds in the 3rd or 4th quartile had underperformed.
Lead Manager
Portfolio Manager
Michael Oh is a Portfolio Manager at Matthews Asia. He manages the firm's Asia Innovators and Korea Strategies and co-manages the Asia Growth Strategy. Michael joined Matthews Asia in 2000 as a Research Analyst and has built his investment career at the firm. Michael was promoted from Research Analyst to Assistant Portfolio Manager in 2003. In 2006 and 2007, he was promoted to Lead Manager of the Matthews Asia Innovators Strategy and the Matthews Korea Strategy, respectively. From 2000-2003, Michael's research focused on the technology sector supporting multiple strategies managed by the founders of the firm. As a research analyst, he contributed investment ideas to the broader Matthews Asia investment teams. Michael received a B.A. in Political Economy of Industrial Societies from the University of California, Berkeley. He is fluent in Korean.
Co-Manager
Portfolio Manager
Raymond Deng is a Portfolio Manager at Matthews Asia, and co-manages the firm's Pacific Tiger and Asia Innovators Strategies. Prior to joining the firm in 2014, Raymond earned an M.B.A from The University of Chicago Booth School of Business. From 2008 to 2012, he worked at Booz & Company, most recently as a Senior Consultant responsible for developing corporate growth strategies, financial analysis and modeling and client management. Raymond received a B.S. in Industrial Engineering from Tsinghua University in Beijing. He is fluent in Mandarin.
Source: BNY Mellon Investment Servicing (US) Inc.
Source: FactSet Research Systems
Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: BNY Mellon Investment Servicing (US) Inc.
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 Markit iBoxx Asian Local Bond Index tracks the total return performance of a bond portfolio consisting of local-currency denominated, high quality and liquid bonds in Asia ex-Japan. The Markit iBoxx Asian Local Bond Index includes bonds from the following countries: China (on- and offshore markets), Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.
The J.P. Morgan Asia Credit Index (JACI) tracks the total return performance of the Asia fixed-rate dollar bond market. JACI is a market cap-weighted index comprising sovereign, quasi-sovereign and corporate bonds and is partitioned by country, sector and credit rating. JACI includes bonds from the following countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand.
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 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 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 September 30, 2020
For the quarter ending September 30, 2020, the Matthews Asia Innovators Fund returned 13.91% (Investor Class) and 13.97% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index returned 10.79%.
Market Environment:
Across most Asian markets, equities continued to climb in the third quarter as major economies further relaxed COVID-19 pandemic lockdown restrictions. Although COVID-19 cases continued to rise significantly, especially in India and parts of ASEAN, the gradual reopening of businesses —particularly those focused on services and consumption in north Asia—helped bolster sentiment and bring a floor to stock prices globally.
China’s V-shaped recovery in manufacturing along with a now steady recovery in domestic consumption has brought some normalcy to daily life. South Korea and Taiwan have also experienced a similar though not quite as robust a recovery as China. Continued market recovery in the third quarter was a function of easing of lockdowns combined with significant fiscal support and monetary easing from major developed and emerging governments and central banks. The dispersion of regional and country returns was significant for the quarter. India was Asia’s best performer followed by the north Asian countries of Taiwan, South Korea and China. Many Asian currencies appreciated against the U.S. dollar, providing an additional tailwind for equities. Growth stocks outpaced value and small caps outperformed large caps.
Although headline returns for broader markets were strong in the quarter, momentum started to slow in September as investors began to question the continued deceleration of COVID cases in major economies outside north Asia, as well as doubts as to whether governments would continue to provide fiscal support in the face of higher deficits. In addition, monetary easing limitations have investors wondering whether governments have the willingness or ability to provide additional stimulus.
Performance Contributors and Detractors:
During the third quarter, gaming and e-commerce company Sea Ltd. contributed to Fund performance. Based in Singapore, it’s one of the few Internet companies focused on serving customers in South and Southeast Asia with significant businesses in Singapore, Indonesia and Thailand that has achieved significant scale and market share. Sea Ltd., was among the first movers in e-commerce and gaming—attractive secular growth areas in Asia—and one of the first companies to build a regional platform, providing an edge over smaller competitors that may only operate within a single country. As a result the company enjoys significant market share and brand recognition.
A detractor to performance was computer-chip maker Silergy Corp., headquartered in Hangzhou, China. The company’s stock price has appreciated considerably over the past couple of years, benefiting from increased demand for local technology solutions in China. U.S. – China trade tensions have accelerated the development of technology supply chains within China. The stock price corrected in the quarter, which we view as a healthy correction. We continue to like the company’s long-term prospects and expect that local supply chains for computer chip technology in China may continue to expand for the next five to 10 years and beyond. The majority of semiconductors used by Chinese companies are still imported, so we believe the company has a long growth trajectory serving China’s domestic market.
From a country perspective, stock selection in China contributed to relative performance, while an underweight in Taiwan detracted. Many of our Chinese holdings, concentrated in innovative sectors, such as communication services and health care, performed well in the quarter. While we added to our exposure in Taiwan in the quarter, we remain significantly underweight relative to the benchmark. Taiwanese stocks performed well on Taiwan’s highly effective response to COVID-19, as well as lingering U.S. – China trade tensions. From a sector perspective, communication services, financials and consumer discretionary contributed to relative performance. On the other hand, information technology, health care and industrials detracted.
Notable Portfolio Changes:
During the quarter, we initiated a new position in Tongcheng-Elong Holdings, an online travel agency in China focused on domestic trips. Domestic travel has already resumed to nearly pre-pandemic levels in China and we expect a continued strong recovery. Another new position is Xpeng Inc., which makes electric cars in China for local consumers. While there are many electric vehicle manufacturers in China, Xpeng maintains a strong focus on new technology, including autonomous driving research. The company’s electric cars are priced very competitively within China, and the travel range per charge is very good. Within the health care sector, we also exited a couple of positions in order to take profits and concentrate our holdings within the sector, increasing our weight to Innovent Biologics where we continue to see compelling opportunities for long-term growth.
Outlook:
Looking ahead, we could see additional market volatility as the global economy continues to adapt to life amid the pandemic. We believe many parts of Asia may be well positioned to regain its economic footing because of effective, ongoing public health responses to reducing COVID transmissions. Managing the virus is key to maintaining economic activity. In our view, China remains an important market for regional investors, as it is currently the only large economy that the International Monetary Fund (IMF) forecasts may have positive economic expansion in 2020. Although stock prices for our portfolio holdings have risen in recent quarters, these valuations are backed by strong underlying company fundamentals. Many of our portfolio companies have generated positive year-over-year revenue growth. We seek to invest in companies that we want to own for five years or longer, so investing with a long-term focus remains key. We anticipate that companies with strong organic structural growth have the potential to perform better. Sectors such as health care, Internet services, software and online education may provide attractive opportunities for long-term investors.
As of 09/30/2020, the securities mentioned comprised the Matthews Asia Innovators Fund in the following percentages: Sea, Ltd. ADR, 5.8%; Silergy Corp., 1.6%; Tongcheng-Elong Holdings, Ltd., 1.6%; XPeng, Inc. ADR, 2.7%; Innovent Biologics, Inc., 3.4%. Current and future portfolio holdings are subject to change and risk.
Average Annual Total Returns - MATFX as of 12/31/2020
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