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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

2.69%

YTD Return

(as of 04/16/2024)

$21.76

NAV

(as of 04/16/2024)

-0.20

1 Day NAV Change

(as of 04/16/2024)

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 $361.81 million (03/31/2024)
Currency USD
Ticker MPACX
Cusip 577-130-867
Portfolio Turnover 77.3%
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 1.13%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 03/31/2024
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
2.44% 7.13% 7.13% 7.91% -13.59% 0.50% 3.67% 6.87%
MSCI All Country Asia Pacific Index
2.82% 5.13% 5.13% 12.11% -1.96% 4.80% 5.30% 6.44%
As of 03/31/2024
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
2.44% 7.13% 7.13% 7.91% -13.59% 0.50% 3.67% 6.87%
MSCI All Country Asia Pacific Index
2.82% 5.13% 5.13% 12.11% -1.96% 4.80% 5.30% 6.44%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Matthews Asia Growth Fund - MPACX
MPACX
3.53% -33.12% -14.65% 46.76% 26.18% -16.25% 39.39% 0.92% -0.05% 1.49%
MSCI All Country Asia Pacific Index
11.81% -16.92% -1.19% 20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29%

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 03/31/2024)

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
  • 3rd
  • 13 out of 20 funds
  • 3 YEAR
  • 4th
  • 16 out of 16 funds
  • 5 YEAR
  • 3rd
  • 12 out of 16 funds
  • 10 YEAR
  • 3rd
  • 9 out of 14 funds
  • SINCE INCEPTION
  • 2nd
  • 4 out of 9 funds

Ratings agency calculation methodology

Portfolio Managers

Michael J. Oh, CFA photo
Michael J. Oh, CFA

Lead Manager

Peeyush  Mittal, CFA photo
Peeyush Mittal, CFA

Co-Manager

Shuntaro  Takeuchi photo
Shuntaro Takeuchi

Co-Manager

Portfolio Characteristics

(as of 03/31/2024)
Fund Benchmark
Number of Positions 57 1,464
Weighted Average Market Cap $183.4 billion $107.5 billion
Active Share 73.3 n.a.
P/E using FY1 estimates 18.6x 14.8x
P/E using FY2 estimates 16.2x 13.3x
Price/Cash Flow 14.9 9.5
Price/Book 2.7 1.7
Return On Equity 16.3 13.8
EPS Growth (3 Yr) 33.2% 13.4%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 03/31/2024)
-11.43%
Alpha
0.98
Beta
63.48%
Upside Capture
121.19%
Downside Capture
-0.83
Sharpe Ratio
-1.11
Information Ratio
10.43%
Tracking Error
71.68

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 03/31/2024)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 6.5
Keyence Corp. Information Technology Japan 4.3
Hitachi, Ltd. Industrials Japan 4.0
Shin-Etsu Chemical Co., Ltd. Materials Japan 4.0
Zomato, Ltd. Consumer Discretionary India 3.1
Tokyo Electron, Ltd. Information Technology Japan 3.0
Samsung Electronics Co., Ltd. Information Technology South Korea 2.8
PT Bank Rakyat Indonesia Persero Tbk Financials Indonesia 2.7
NVIDIA Corp. Information Technology United States 2.5
Sumitomo Mitsui Financial Group, Inc. Financials Japan 2.4
TOTAL 35.3

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 03/31/2024)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 31.0 20.5 10.5
Consumer Discretionary 20.4 14.9 5.5
Financials 18.1 19.4 -1.3
Industrials 11.5 12.5 -1.0
Health Care 5.7 5.7 0.0
Communication Services 5.3 7.6 -2.3
Materials 4.0 6.5 -2.5
Energy 2.0 3.0 -1.0
Consumer Staples 1.1 4.7 -3.6
Real Estate 0.0 3.2 -3.2
Utilities 0.0 2.1 -2.1
Cash and Other Assets, Less Liabilities 1.0 0.0 1.0

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

Country Fund Benchmark Difference
Japan 35.8 34.9 0.9
India 17.3 11.1 6.2
China/Hong Kong 11.8 18.4 -6.6
Taiwan 11.4 11.0 0.4
South Korea 8.9 8.1 0.8
Indonesia 4.4 1.2 3.2
United States 2.5 0.0 2.5
Netherlands 2.0 0.0 2.0
Philippines 1.7 0.4 1.3
Singapore 1.5 2.0 -0.5
Australia 1.1 10.7 -9.6
Vietnam 0.5 0.0 0.5
Thailand 0.0 1.0 -1.0
Malaysia 0.0 0.9 -0.9
New Zealand 0.0 0.3 -0.3
Macau 0.0 0.1 -0.1
Cash and Other Assets, Less Liabilities 1.0 0.0 1.0

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 78.3 63.2 15.1
Large Cap ($10B-$25B) 11.1 20.9 -9.8
Mid Cap ($3B-$10B) 6.6 15.4 -8.8
Small Cap (under $3B) 3.0 0.5 2.5
Cash and Other Assets, Less Liabilities 1.0 0.0 1.0

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)
12/13/2023 12/14/2023 $0.37967 $0.00000 $0.00000 $0.37967 1.8% 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 December 31, 2023

For the year ending December 31, 2023, the Matthews Asia Growth Fund returned 3.53% (Investor Class) and 3.69% (Institutional Class), while its benchmark, the MSCI All Country Asia Pacific Index, returned 11.81% over the same period. For the fourth quarter, the Fund returned 8.32% (Investor Class) and 8.31% (Institutional Class), while the benchmark returned 8.00%.

Market Environment 

2023 was challenging on many levels for Asia equity markets. At the macro level, rising interest rates and a strong U.S. dollar were headwinds for the region. Growth companies were out of favor while value companies outperformed. Geopolitical tensions between the U.S. and China also remained elevated, particularly in the first half, and we expect these tensions to continue. The most notable feature, however, was the prolonged weakness of the Chinese economy. The rapid post-COVID recovery that many investors expected didn’t materialize and the country instead struggled with a lack of confidence and problems in specific sectors like real estate. Mitigating China’s woes somewhat was India’s continued resilient growth, supported in part by its domestic infrastructure programs and increasing global trade. Information technology (IT) was the largest contributor to returns in the region, while communication services was among the laggards. Toward the end of the year, there was a general consensus that inflation had peaked in the global economy and that the U.S. Federal Reserve would pivot toward cutting rates in 2024 and the dollar would weaken. This provided some tailwinds across the region in the final quarter of 2023. 

Performance Contributors and Detractors

Regionally, our stock selection in Indonesia, our underweight allocation to Thailand and zero exposure to Malaysia contributed the most to relative returns in 2023. On the other hand, our overweight and stock selection in China/Hong Kong was the biggest detractor to relative returns in the year. Our exposure was hurt by the much slower-than-expected recovery in China, international concerns over geopolitical risks, and regulatory uncertainties related to technology companies.

At the sector level, stock selection in financials and materials contributed the most to relative returns. In contrast, our overweight allocation to and stock selection within health care as well as consumer discretionary detracted the most from relative performance for the year. 

On a company basis, Disco Corp. contributed the most to absolute and relative returns.  Disco provides cutting and grinding tools to the semiconductor industry. The company benefited from the strength in the broader IT sector and growth in areas such as power semiconductors. We believe Disco is well positioned to benefit from growing demand from the artificial intelligence (AI) industry. On the other hand, JD.com, China’s leading e-commerce platform company, was one of the top detractors to absolute and relative returns. JD.com has been losing share to Pinduoduo (PDD) as more consumers seek better value for money. Additionally, the company has generated concerns overs its growth prospects and has been weighed down by China’s muted recovery.

Notable Portfolio Changes

We have reduced our exposure to China while increasing our exposure to companies based in Japan. China’s lack of meaningful stimulus is hurting sentiment and the post-COVID recovery has been much slower than expected. Increased regulatory risk in China was another consideration for reducing our exposure to China. In the fourth quarter, we also closed our positions in Chinese health-care companies such as Wuxi Biologics and Hangzhou Tigermed Consulting. Japan’s economy is doing well with the influx of tourists as most countries lift their COVID restrictions. We have also narrowed the portfolio’s underweight position in South Korea and Taiwan as we believe the two countries will benefit from the expansion of AI. We also increased our exposure to India as we think the country is well positioned since it isn’t facing the kind of challenges that China is facing.  

Outlook

Overall we’re optimistic for 2024. We pivoted during the last quarter of the year to adjust the country weightings in the portfolio to address on-going evolution in the region. China remains challenging. We believe the government is not making necessary reforms to improve its domestic economy and unless we see a firm change in policies and an improvement in the regulatory environment we will maintain a cautious view on the Chinese equity market. 

In contrast, we are optimistic on India. It doesn’t have the same issues that have negatively impacted the Chinese market and, in many ways, India has the potential to replicate the success that China has had in the past 20 years. Valuations, however, remain elevated and we will be very selective in picking our investments. Japan overall continues to enjoy several tailwinds including a positive earnings cycle driven by moderate inflation, meaningful wage gains and policy driven reforms which are pushing companies to increase their corporate value via capital efficiencies and shareholder payouts.

More generally, the semiconductor industry is passing the bottom of the cycle and Asia maintains its leading edge when it comes to the foundry and the memory segments which are the backbone of the global industry. The consumer market in Asia also remains the largest and fastest growing market in the world and provides a great foundation for innovation and entrepreneurship to flourish.

 

View the Fund’s Top 10 holdings as of December 31, 2023. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MPACX as of 03/31/2024
1YR 3YR 5YR 10YR Since Inception Inception Date
7.91% -13.59% 0.50% 3.67% 6.87% 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 1.13%

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.