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Matthews Pacific Tiger Fund MAPTX

Snapshot
  • Seeks alpha in Asia’s emerging economies by capitalizing on the rising Asia consumer
  • High-conviction equity portfolio focused on sustainable growth companies
  • All-cap fundamental approach driven by on-the-ground, proprietary research

09/12/1994

Inception Date

-3.78%

YTD Return

(as of 01/26/2022)

$26.50

Price

(as of 01/26/2022)

$7.19 billion

Fund Assets

(as of 12/31/2021)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Pacific Tiger 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 Ex Japan. 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.

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

Fund Facts
Inception Date 09/12/1994
Fund Assets $7.19 billion (12/31/2021)
Currency USD
Ticker MAPTX
Cusip 577-130-107
Portfolio Turnover 38.1%
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia Ex Japan - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region, excluding Japan
Fees & Expenses
Gross Expense Ratio 1.08%
Net Expense Ratio 1.06%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 12/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund
MAPTX
0.87% -0.19% -4.41% -4.41% 10.89% 11.15% 8.89% 8.66% 09/12/1994
MSCI All Country Asia ex Japan Index
1.41% -1.18% -4.46% -4.46% 12.38% 11.61% 8.32% 5.02%
As of 12/31/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund
MAPTX
0.87% -0.19% -4.41% -4.41% 10.89% 11.15% 8.89% 8.66% 09/12/1994
MSCI All Country Asia ex Japan Index
1.41% -1.18% -4.46% -4.46% 12.38% 11.61% 8.32% 5.02%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Pacific Tiger Fund
MAPTX
-4.41% 28.83% 10.72% -11.11% 39.96% -0.16% -1.30% 11.79% 3.63% 21.00%
MSCI All Country Asia ex Japan Index
-4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70%

MSCI AC Asia ex Japan Index since inception value calculated from 08/31/94.

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 12/31/2021)

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 52 funds
  • 3 YEAR
  • out of 52 funds
  • 5 YEAR
  • out of 45 funds
  • 10 YEAR
  • out of 32 funds
  • 1 YEAR
  • 2nd
  • 11 out of 33 funds
  • 3 YEAR
  • 4th
  • 29 out of 33 funds
  • 5 YEAR
  • 2nd
  • 14 out of 27 funds
  • 10 YEAR
  • 2nd
  • 7 out of 19 funds
  • SINCE INCEPTION
  • 1st
  • 1 out of 4 funds

Ratings agency calculation methodology

Portfolio Managers

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Lead Manager

Inbok  Song photo
Inbok Song

Lead Manager

Winnie  Chwang photo
Winnie Chwang

Co-Manager

Portfolio Characteristics

(as of 12/31/2021)
Fund Benchmark
Number of Positions 65 1,213
Weighted Average Market Cap $143.0 billion $147.0 billion
Active Share 67.1 n.a.
P/E using FY1 estimates 21.1x 13.6x
P/E using FY2 estimates 20.2x 13.0x
Price/Cash Flow 18.2 9.7
Price/Book 3.7 1.9
Return On Equity 17.0 13.6
EPS Growth (3 Yr) 4.8% -6.4%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 12/31/2021)
-0.70%
Alpha
0.95
Beta
83.79%
Upside Capture
88.59%
Downside Capture
0.57
Sharpe Ratio
-0.26
Information Ratio
5.72%
Tracking Error
89.55

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 12/31/2021)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 8.2
Samsung Electronics Co., Ltd. Information Technology South Korea 5.1
Tencent Holdings, Ltd. Communication Services China/Hong Kong 5.0
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 2.7
Central Pattana Public Co., Ltd. Real Estate Thailand 2.4
Kweichow Moutai Co., Ltd. Consumer Staples China/Hong Kong 2.2
ICICI Bank, Ltd. Financials India 2.2
Meituan Consumer Discretionary China/Hong Kong 2.1
SM Prime Holdings, Inc. Real Estate Philippines 2.1
NAVER Corp. Communication Services South Korea 2.0
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 12/31/2021)
  • 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)
12/14/2021 12/15/2021 $0.00000 $0.50110 $5.35902 $5.86012 17.4% N.A.
12/15/2020 12/16/2020 $0.08242 $0.42745 $1.49657 $2.00644 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 December 31, 2021

For the year ending December 31, 2021, the Matthews Pacific Tiger Fund returned -4.41% (Investor Class) and -4.29% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned -4.46% over the same period. For the fourth quarter of the year, the Fund returned -0.19% (Investor Class) and -0.18% (Institutional Class), while the benchmark returned -1.18%.

Market Environment:

Most Asian equity markets failed to recover the losses sustained in the third quarter as continuing concerns around the real estate sector in China along with the potential shift in the inflationary regime weighed on investor sentiment. Stocks with higher valuation multiples, especially in growth sectors like health care and internet software, continued to underperform the broader market in the fourth quarter. On the flip side, rate sensitive companies like banks outperformed.

For the full year, sectors like energy, utilities and industrials have delivered outsized gains compared to growth-sensitive stocks, as investors anticipate a more reflationary environment in Asia. Sub-industries such as shipping are benefiting from disruptions in supply chains, although the sustainability of this trend remains uncertain. Small-cap stocks continued to outperform during the fourth quarter, and finished the year with stronger gains compared to large cap peers.

Tourism- and consumption-oriented economies like Indonesia and Thailand are beginning to attract foreign investor flows as the recovery from COVID-19 is starting to gain hold, and equity valuations in those countries remain relatively attractive. In addition, most Asian currencies depreciated against the U.S. dollar during 2021 (with the exception of the Chinese renminbi), though the magnitude of depreciation was well contained owing to the improved current account balances and foreign currency reserves of many Asian countries.

Performance Contributors and Detractors:

During the year, contributors to performance included stock selection in India and South Korea. Indian utility company Tata Power is emerging as a potential beneficiary of the transition to renewable energy in India, and market participants appreciated the positive governance attributes of the management team, pushing Tata’s stock price significantly higher during the year. Several South Korean holdings contributed to relative performance. While these companies operate in different sectors, investors have continued to be impressed by their earnings power and operational excellence.

On the other hand, stock selection in China and Taiwan were significant detractors to relative performance in 2021. The portfolio’s information technology (IT)-related holdings suffered an erosion in valuation multiples, weighed down by the underperformance of Chinese internet platform companies. Investors were concerned that China’s proposed regulations within the sector may lead to higher cost burdens for some of these companies. For example, portfolio holding Ming Yuan Cloud Group Holdings, provider of SaaS/ERP (Software as a Service Enterprise Resource Planning) services for the real estate sector, suffered from weakness during 2021. Nevertheless, we believe our investment thesis is intact, as the digitization of real estate transactions looks to be a durable trend in China.

The portfolio’s underweight allocations to sectors like financials, energy and materials were sources of relative underperformance during 2021, while stock selection in utilities and consumer discretionary helped overall performance.

Notable Portfolio Changes:

At a country level, the biggest change was a decline in the weight in the China/Hong Kong region, and a corresponding increase in the weight in Taiwan. The decline in China was primarily driven by a consolidation in holdings in the consumer discretionary, consumer staples and financial sectors, compounded by a fall in Chinese equity prices. As a part of the consolidation process, we chose to increase the weights of companies in which we have a high conviction in the long term, taking advantage of recent share price weakness. A good example is web-based shopping platform Meituan. We believe that the recent increase in regulatory and compliance costs within the industry will increase the moat around their delivery business, while their offerings in travel and in-store marketing continue to strengthen.

The increase in Taiwan was primarily driven by diversification of holdings into the financials and consumer discretionary sectors, as we continue to seek diversified growth. Chailease Holding Co. is an example of this, as the company skillfully operates their leasing business in China with strict control over their underwriting processes. Chailease has continued to show solid growth with a sustained return on equity profile.

At the sector level, the biggest change during the course of 2021 was an increase in industrials holdings, led by the introduction of two mid-size companies: Indian automotive manufacturer Ashok Leyland and South Korean industrial and construction equipment maker Doosan Bobcat. In both these cases, management teams continued to sharpen their operational capabilities, and are well placed for a recovery within the markets they operate, in our view.

Outlook:

There are several crosscurrents that are likely to impact earnings across the region. Cost pressures are proving to be more intransigent than previously anticipated, although the inflation readings in Asia have not been as remarkable as in the U.S. With the anticipated tightening of U.S. monetary policy, China’s central bank has stayed neutral to slightly dovish, while other Asian central bank have started or are likely to begin to raise interest rates. It remains unclear how the evolution of monetary and fiscal policies will impact the flow and availability of capital for businesses across the region, and ultimately the valuations for stocks within Asia. Foreign institutional flows (FII) have remained resilient thus far—in fact, China was the highest recipient of foreign equity flows.

Meanwhile, consumer demand patterns continue to improve, especially in India and Southeast Asia, while still remaining robust in countries like China. In our view, the risk to demand and consumer spending stems from further setbacks to consumer sentiment from COVID-19, or weakness in sectors like real estate in China. Other risks that we continue to monitor stem from policy-related missteps that may result in unintended downward pressure on business and consumption activities—recent examples of this include the implementation of electrical power production cuts in China and the continuation of its zero-COVID policy.

That being said, we continue to believe that the pandemic has catalyzed and accelerated positive changes for businesses across Asia. The most obvious impacts have been the embrace of technology and an increasing regard for environmental, social and governance (ESG)-related factors. Along with these factors, and continued uncertainty from regulatory changes in China, we believe that there will be greater divergence in operating performance in companies in coming periods. The core of the portfolio continues to be invested in businesses that we believe are capable of harnessing these changes and improving their stature and share.

Secular growth opportunities in areas like renewable energy, health care, and various aspects of IT continue to deepen across the region. At the same time, the increasing purchasing power of the consumer and a more aspirational lifestyle throughout Asia are creating fertile ground for innovation in traditional areas related to domestic consumption. We continue to see the opportunity set broaden, and the team remains focused on finding uncorrelated and diversified long-term growth in Asian equities.

As of December 31, 2021, the securities mentioned comprised the Matthews Pacific Tiger Fund in the following percentages: Tata Power Co., 1.6%; Ming Yuan Cloud Group Holdings, 0.8%; Meituan, 2.1%; Chailease, 1.6%; Ashok Leyland, 1.6%; and Doosan Bobcat, 1.3%.

Current and future portfolio holdings are subject to change and risk.

The Fund does not have a dedicated ESG mandate. 

Earnings growth is not representative of the Fund’s future performance.

 

Average Annual Total Returns - MAPTX as of 12/31/2021
1YR 3YR 5YR 10YR Since Inception Inception Date
-4.41% 10.89% 11.15% 8.89% 8.66% 09/12/1994

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%
Net Expense Ratio 1.06%

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.

 

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.