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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

-29.04%

YTD Return

(as of 08/09/2022)

$22.70

NAV

(as of 08/09/2022)

-0.12

1 Day NAV Change

(as of 08/09/2022)

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.

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

Fund Facts
Inception Date 10/31/2003
Fund Assets $907.65 million (07/31/2022)
Currency USD
Ticker MPACX
Cusip 577-130-867
Portfolio Turnover 42.4%
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 1.07%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 07/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund - MPACX
10/31/2003
MPACX
2.05% -2.18% -29.88% -37.46% -1.60% 1.14% 5.74% 7.18%
MSCI All Country Asia Pacific Index
1.80% -4.04% -15.50% -16.47% 2.99% 2.67% 5.85% 6.21%
As of 06/30/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Growth Fund - MPACX
10/31/2003
MPACX
-1.96% -12.39% -31.29% -44.60% -2.11% 1.27% 5.60% 7.10%
MSCI All Country Asia Pacific Index
-6.34% -11.78% -16.99% -21.99% 2.13% 3.11% 5.81% 6.13%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Asia Growth Fund - MPACX
MPACX
-14.65% 46.76% 26.18% -16.25% 39.39% 0.92% -0.05% 1.49% 19.35% 17.47%
MSCI All Country Asia Pacific Index
-1.19% 20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29% 12.19% 17.05%

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 06/30/2022)

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 10 funds
  • 3 YEAR
  • out of 10 funds
  • 5 YEAR
  • out of 10 funds
  • 1 YEAR
  • 4th
  • 25 out of 25 funds
  • 3 YEAR
  • 4th
  • 20 out of 25 funds
  • 5 YEAR
  • 3rd
  • 13 out of 23 funds
  • 10 YEAR
  • 1st
  • 4 out of 20 funds
  • SINCE INCEPTION
  • 2nd
  • 4 out of 9 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 06/30/2022)
Fund Benchmark
Number of Positions 53 1,503
Weighted Average Market Cap $63.8 billion $84.5 billion
Active Share 86.7 n.a.
P/E using FY1 estimates 22.5x 11.9x
P/E using FY2 estimates 19.1x 11.3x
Price/Cash Flow 16.6 7.6
Price/Book 3.4 1.5
Return On Equity 7.4 14.2
EPS Growth (3 Yr) 19.8% 10.5%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 06/30/2022)
-3.43%
Alpha
1.14
Beta
100.14%
Upside Capture
116.96%
Downside Capture
-0.13
Sharpe Ratio
-0.33
Information Ratio
12.81%
Tracking Error
65.91

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 07/31/2022)
Name Sector Country % Net Assets
Dabur India, Ltd. Consumer Staples India 4.5
HDFC Bank, Ltd. Financials India 4.5
CSL, Ltd. Health Care Australia 4.2
PT Bank Rakyat Indonesia Persero Tbk Financials Indonesia 4.2
Sony Group Corp. Consumer Discretionary Japan 4.0
Bajaj Finance, Ltd. Financials India 3.8
GMO Payment Gateway, Inc. Information Technology Japan 3.4
Toyota Motor Corp. Consumer Discretionary Japan 3.2
Daiichi Sankyo Co., Ltd. Health Care Japan 3.2
Reliance Industries, Ltd. Energy India 3.1
TOTAL 38.1

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 06/30/2022)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Health Care 26.1 6.5 19.6
Consumer Discretionary 21.0 15.6 5.4
Information Technology 14.1 16.8 -2.7
Financials 11.4 18.6 -7.2
Communication Services 8.6 9.0 -0.4
Consumer Staples 7.0 5.7 1.3
Industrials 6.5 11.2 -4.7
Energy 3.2 3.1 0.1
Materials 1.8 6.9 -5.1
Real Estate 0.0 4.1 -4.1
Utilities 0.0 2.4 -2.4
Cash and Other Assets, Less Liabilities 0.2 0.0 0.2

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

Country Fund Benchmark Difference
China/Hong Kong 32.6 27.8 4.8
Japan 30.5 30.4 0.1
India 18.9 8.3 10.6
Australia 6.8 10.7 -3.9
Indonesia 4.9 1.2 3.7
United States 2.8 0.0 2.8
Vietnam 1.3 0.0 1.3
Singapore 1.0 2.0 -1.0
Taiwan 0.9 9.4 -8.5
South Korea 0.0 7.4 -7.4
Thailand 0.0 1.2 -1.2
Malaysia 0.0 1.0 -1.0
Philippines 0.0 0.5 -0.5
New Zealand 0.0 0.2 -0.2
Cash and Other Assets, Less Liabilities 0.2 0.0 0.2

Not all countries are included in the benchmark index(es).

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 54.1 57.8 -3.7
Large Cap ($10B-$25B) 15.3 22.2 -6.9
Mid Cap ($3B-$10B) 21.3 19.0 2.3
Small Cap (under $3B) 9.1 1.0 8.1
Cash and Other Assets, Less Liabilities 0.2 0.0 0.2

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 $0.47969 $1.17413 $1.65382 4.8% 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 June 30, 2022

For the first half of 2022, the Matthews Asia Growth Fund returned -31.29% (Investor Class) and -31.24% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned -16.99% over the same period. For the quarter ending June 30, 2022, the Fund returned -12.39% (Investor Class) and -12.38% (Institutional Class), while the benchmark returned -11.78%.

Market Environment:

The first half of the year was a challenging period. Elevated inflation data and diminishing consumer spending in many regions dampened global sentiment and sparked recessionary fears. While Asian equity markets endured choppy waters they performed well in the second quarter, experiencing less downside than commodity heavy, weak-performing EMEA (Europe, Middle East, Africa) and LatAm regions. In particular, Chinese equities saw a strong rebound—in both Hong Kong-listed stocks and local A-Shares. Chinese fiscal and monetary support, combined with more lenient zero-COVID policy implementation, a reduction of regulatory pressure on internet and platform monopolies and progress on real estate re-financing roadblocks enabled a rebound in sentiment and economic activity. Conversely, South Korea was a major market laggard followed by Taiwan, Japan and India. In terms of investing styles, Asian growth stocks continued to trail value stocks, especially in Japan, and small caps suffered more than their larger cap regional peers.

Performance Contributors and Detractors:

From a regional perspective, China/Hong Kong and Japan detracted the most from relative performance during the first half of the year. Once again, the returns from our Japanese holdings were impacted by the weakening of the yen against the U.S. dollar as Japan maintains a loose monetary policy and the Federal Reserve aggressively tightens and hikes rates to combat inflation. On the other hand, our underweight in South Korea and Taiwan contributed positively to performance.

From a sector perspective, our overweight and stock selection within health care and our stock selection within information technology (IT) detracted from performance while our underweight in the industrials sector contributed the most to relative performance for the first half.

Turning to individual securities, Japanese IT names Tokyo Electron and GMO Payment Gateway were among the largest detractors to absolute performance over the period. Tokyo Electron is one of the largest semiconductor equipment companies in the world and a sudden change in investor mindset toward the industry in early June drove stock prices down. The concern may be that the risk of recession will lower end-demand for semiconductors over the next few quarters. GMO Payment is a high valuation stock in Japan when the market is still favoring low P/E value names. We still think that company has a steady 20-25% growth rate on solid fundamentals.

On the positive side, Chinese health-care holding Legend Biotech Corp. and Japanese health-care holding Daiichi Sankyo contributed the most to relative performance during the first half of the year. These companies were the exceptions from the onslaught of the entire health care sector in the first half and bucked the trend by announcing positive clinical data at the annual American Society of Clinical Oncology (ASCO) meeting in early June. Investors appear to give extra credit to “first-in-class” innovative drug development close to commercialization. Both Legend’s CATR-T therapy and Daiichi’s antibody-drug conjugate (ADC) would be competing against the global giants in the cancer treatment in the U.S. and elsewhere.

Notable Portfolio Changes:

During the second quarter, we took the opportunity to close out of several smaller positions including Wuxi Apptec, a Chinese biologics company and Sansan Inc, a Japanese mobile software solutions company. 

We also initiated positions in Huazhu Hotel Group, a leading hotel chain in China that we believe should benefit from increased travel, and Hitachi, a Japanese multinational conglomerate focused primarily on digital systems and services as well as green energy solutions. Both companies are quality growth names in our view which should be well suited for the uncertain investment environment we are in right now.

Outlook:

Looking ahead, we believe markets may see more volatility as they come to terms with the severity of Fed hikes, tighter global liquidity and protracted inflation. That said, we believe that markets have priced in a substantial amount of uncertainty, especially within Asia and China, and not withstanding a sudden and severe downturn of global economic activity or a geopolitical shift, we believe there may be plenty of upside to come.

In particular, China should be positioned well for a pickup in domestic activity as the government is starting to support consumers and small and medium enterprises (SMEs) through gradual release of stimulus programs. Unlike the interest rate cycle in the West, interest rates are easing in China which may help lower the cost of capital for companies. In other parts of Asia, shopping mall operators in Southeast Asia stand to benefit from resumption of tourism activities. 

View the Fund’s Top 10 holdings as of June 30, 2022. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MPACX as of 06/30/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-44.60% -2.11% 1.27% 5.60% 7.10% 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 1.07%

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.