TOP
Asia Growth

Matthews India Fund MINDX

Snapshot
  • Unconstrained all-cap strategy focused on companies with a sustainable competitive edge and pricing power, which are able to perform throughout economic cycles
  • Fundamental bottom-up approach to seek well-run entrepreneurial companies with sustainable organic growth and trustworthy managements
  • Bias toward businesses that cater to rising domestic consumer demand and to policy-independent sectors

10/31/2005

Inception Date

-13.99%

YTD Return

(as of 06/27/2022)

$24.23

Price

(as of 06/27/2022)

$640.28 million

Fund Assets

(as of 05/31/2022)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews India Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in publicly traded common stocks, preferred stocks and convertible securities of companies located in India. 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 markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 10/31/2005
Fund Assets $640.28 million (05/31/2022)
Currency USD
Ticker MINDX
Cusip 577-130-859
Portfolio Turnover 42.5%
Benchmark S&P Bombay Stock Exchange 100 Index
Geographic Focus India
Fees & Expenses
Gross Expense Ratio 1.10%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • data_graph_selected Created with Sketch.
  • bar_graph_selected Created with Sketch.
As of 05/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund
MINDX
-3.85% -4.50% -10.33% -2.92% 5.58% 4.41% 11.03% 9.90% 10/31/2005
S&P Bombay Stock Exchange 100 Index
-4.87% -3.11% -7.45% 1.14% 9.39% 8.61% 11.07% 10.30%
As of 03/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund
MINDX
1.06% -5.11% -5.11% 8.88% 7.03% 6.11% 9.92% 10.38% 10/31/2005
S&P Bombay Stock Exchange 100 Index
3.53% -1.10% -1.10% 16.28% 12.48% 11.19% 9.91% 10.86%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews India Fund
MINDX
18.11% 16.45% -0.88% -10.09% 35.79% -1.23% 0.90% 63.71% -5.90% 31.54%
S&P Bombay Stock Exchange 100 Index
24.08% 13.92% 8.53% -6.00% 41.88% 2.32% -6.41% 31.40% -4.70% 28.62%

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 03/31/2022)

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 20 funds
  • 3 YEAR
  • out of 20 funds
  • 5 YEAR
  • out of 18 funds
  • 10 YEAR
  • out of 17 funds
  • 1 YEAR
  • 4th
  • 21 out of 23 funds
  • 3 YEAR
  • 4th
  • 19 out of 20 funds
  • 5 YEAR
  • 4th
  • 17 out of 18 funds
  • 10 YEAR
  • 2nd
  • 7 out of 17 funds
  • SINCE INCEPTION
  • n.a.
  • 1 out of 2 funds

Ratings agency calculation methodology

Portfolio Managers

Peeyush  Mittal, CFA photo
Peeyush Mittal, CFA

Lead Manager

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Co-Manager

Portfolio Characteristics

(as of 03/31/2022)
Fund Benchmark
Number of Positions 53 101
Weighted Average Market Cap $58.5 billion $70.6 billion
Active Share 46.2 n.a.
P/E using FY1 estimates 29.5x 23.7x
P/E using FY2 estimates 23.0x 20.3x
Price/Cash Flow n.a. 16.8
Price/Book 4.0 3.6
Return On Equity 15.5 15.3
EPS Growth (3 Yr) 11.7% 2.5%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 03/31/2022)
-4.49%
Alpha
0.99
Beta
75.66%
Upside Capture
94.07%
Downside Capture
0.26
Sharpe Ratio
-0.89
Information Ratio
6.12%
Tracking Error
93.78

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 05/31/2022)
Name Sector % Net Assets
HDFC Bank, Ltd. Financials 7.0
Infosys, Ltd. Information Technology 6.2
ICICI Bank, Ltd. Financials 6.1
Reliance Industries, Ltd. Energy 5.7
Tata Consultancy Services, Ltd. Information Technology 4.6
Kotak Mahindra Bank, Ltd. Financials 3.8
Shriram City Union Finance, Ltd. Financials 3.8
Bandhan Bank, Ltd. Financials 3.6
Hindustan Unilever, Ltd. Consumer Staples 3.3
Bajaj Finance, Ltd. Financials 3.1
TOTAL 47.2

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 03/31/2022)
  • Sector Allocation
  • Market Cap Exposure

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

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 $0.26431 $2.55767 $2.82198 9.2% 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, 2022

For the first quarter of the year, the Fund returned -5.11% (Investor Class) and -5.10% (Institutional Class), while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned -1.10% over the same period.

Market Environment:

India is enduring an acceleration of headwinds most notably related to rising global inflation and the U.S. Federal Reserve’s monetary tightening in response to it. So far India’s central bank has maintained its accommodative policy but we anticipate that will have to change. With China’s COVID lockdowns continuing to impact supply chains, inflation for now seems to be on the front foot. More directly for a major energy importer like India, the surge in oil prices resulting from Russia’s invasion of Ukraine, is a material negative. Higher energy prices feed into higher inflation which in turn creates a drag on consumption and growth.

While the environment is challenging, India has two positives in its favor. One is the recovery in its banking sector, which is now well capitalized to deal with any adverse credit issues. The other is the fast growth of high-value items like engineering goods within India’s exports. This is helping India to diversify away from services and commodities exports and counter current account-deficit pressures from the high oil-price environment.

Performance Contributors and Detractors:

The portfolio’s lack of exposure to utilities and underweight in energy and materials sectors were among the biggest detractors to relative performance. We have historically not focused on these sectors given our growth-orientated strategy and all three areas benefited from the upswing in commodity prices.

Our allocation and stock selection within health care also detracted from performance. More specifically, Neuland Laboratories Limited, a small-cap active pharmaceutical ingredient (API) manufacturer, declined the most, leading to a drag experienced in the sector. The company’s customers are generally small biotech firms. Neuland’s clients destocked inventory last year, leading to slower-than-expected growth for the company. Further, high inflation in certain chemicals has meant pressure on gross margins for Neuland. We expect both of these headwinds to be transitory and still view Neuland as a fundamentally sound business.

On the other hand, the financials sector contributed the most to the portfolio’s relative performance and our stock selection within financials partly offset the negative attribution from other sectors. Specifically, Cholamandalam Investment and Finance was one of the biggest contributors to Fund performance. Cholamandalam is part of Murugappa Group which has a reputation for strong corporate governance. Earlier this year, the Group disclosed a strategy to diversify Cholamandalam’s lending business into newer verticals. Cholamandalam also disclosed a plan to acquire a payments player, indicating an intent to become more of a digital/fintech lender—both of these announcements were received well by the market.

Notable Portfolio Changes:

During the quarter, we reduced our holdings in information technology. Companies in the IT sector were generally insulated from supply chain challenges faced by other sectors. Revenue growth has been robust in the sector amid mass adoption of digital services and valuations have substantially moved past long-term averages, particularly among mid-caps. We believe accelerated monetary policy tightening is going to have a negative impact on technology spend globally and this in turn makes risk-reward less enticing in IT. Positions we closed in the quarter included Mindtree Ltd., an IT and consulting company, and IndiaMART InterMESH Ltd., an e-commerce platform.

After spending the past couple of years replenishing provisions to withstand credit quality issues emanating from COVID-related disruption to businesses and retail borrowers, we think the underlying profitability of the financial services sector is set to emerge. Given current valuations, we think risk-reward is highly favorable in the sector. Consequently, we added to our holdings in Bandhan Bank and Axis Bank.

Outlook:

Higher oil prices will mean inflation is going to edge up in India and this could lead to a worse than anticipated current account shortfall. Historically, such an environment has led to heightened rupee volatility. We don’t expect that to happen this time as India has adequate foreign reserves to meet external payments and inflation is more of a global issue compared to being more India specific in the past. However, the Reserve Bank of India is behind the monetary policy-normalization policies of other major emerging markets, including Brazil and Mexico, and we expect the central bank to begin to tighten. As a result, we think cost of capital in India is going to move higher in the coming 12 months which doesn’t bode well for equity valuations.

Amid macro headwinds, we remain confident in the opportunities that exist among Indian corporates. We think capital goods and the industrials sector will see a significant uptick in activity in the coming 12 months, driven by a recovery in government infrastructure spending and private capital expenditure. We also see an improving outlook for manufactured exports from India.

View the Fund’s Top 10 holdings as of March 31, 2022. Current and future holdings are subject to change and risk.

 

Average Annual Total Returns - MINDX as of 03/31/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
8.88% 7.03% 6.11% 9.92% 10.38% 10/31/2005

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 1.10%

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 markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. In addition, investments in a single-country fund, which is considered a non-diversified fund, may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

 

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.