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Matthews Asia Innovators Fund
MATFX

Snapshot
  • High-conviction, concentrated equity portfolio of innovative companies in Asia
  • All-cap fundamental approach focused on companies with unique offerings that create or expand markets
  • Capitalizing on the new economy and the rising disposable income in Asia

12/27/1999

Inception Date

15.39%

YTD Return

(as of 06/17/2024)

$12.82

NAV

(as of 06/17/2024)

+0.13

1 Day NAV Change

(as of 06/17/2024)

Objective

Long-term capital appreciation

Strategy

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.

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. 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.

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

Fund Facts
Inception Date 12/27/1999
Fund Assets $301.57 million (05/31/2024)
Currency USD
Ticker MATFX
Cusip 577-130-883
Portfolio Turnover 248.2%
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia ex Japan - Consists of all countries and markets in Asia excluding Japan, but including all other developed, emerging, and frontier countries and markets in the Asian region
Fees & Expenses
Gross Expense Ratio 1.15%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 05/31/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund - MATFX
12/27/1999
MATFX
1.85% 3.60% 8.91% 12.56% -11.71% 9.18% 7.90% 4.49%
MSCI All Country Asia ex Japan Index
1.58% 5.51% 5.37% 11.63% -6.79% 4.30% 4.29% 5.58%
As of 03/31/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund - MATFX
12/27/1999
MATFX
1.97% 7.20% 7.20% 2.76% -11.50% 7.29% 8.01% 4.46%
MSCI All Country Asia ex Japan Index
2.58% 2.44% 2.44% 4.36% -6.52% 2.27% 4.49% 5.50%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Matthews Asia Innovators Fund - MATFX
MATFX
-1.77% -24.80% -13.10% 86.72% 29.60% -18.62% 52.88% -9.10% 4.48% 9.24%
MSCI All Country Asia ex Japan Index
6.34% -19.36% -4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11%

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.

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 47 funds
  • 3 YEAR
  • out of 47 funds
  • 5 YEAR
  • out of 46 funds
  • 10 YEAR
  • out of 33 funds
  • 1 YEAR
  • 1st
  • 8 out of 39 funds
  • 3 YEAR
  • 4th
  • 32 out of 38 funds
  • 5 YEAR
  • 1st
  • 2 out of 37 funds
  • 10 YEAR
  • 1st
  • 2 out of 24 funds
  • SINCE INCEPTION
  • 4th
  • 7 out of 8 funds

Ratings agency calculation methodology

Portfolio Managers

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

Lead Manager

Inbok  Song photo
Inbok Song

Co-Manager

Portfolio Characteristics

(as of 03/31/2024)
Fund Benchmark
Number of Positions 45 1,182
Weighted Average Market Cap $295.4 billion $139.1 billion
Active Share 68.6 n.a.
P/E using FY1 estimates 19.2x 13.2x
P/E using FY2 estimates 16.5x 11.7x
Price/Cash Flow 16.9 8.4
Price/Book 3.6 1.6
Return On Equity 19.0 14.2
EPS Growth (3 Yr) 29.7% 12.6%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 03/31/2024)
-3.31%
Alpha
1.14
Beta
104.13%
Upside Capture
115.81%
Downside Capture
-0.59
Sharpe Ratio
-0.48
Information Ratio
10.39%
Tracking Error
82.94

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 05/31/2024)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 10.9
Tencent Holdings, Ltd. Communication Services China/Hong Kong 5.3
PDD Holdings, Inc. Consumer Discretionary China/Hong Kong 4.9
Samsung Electronics Co., Ltd. Information Technology South Korea 4.8
Sea, Ltd. Communication Services Singapore 4.2
Zomato, Ltd. Consumer Discretionary India 3.5
SK Hynix, Inc. Information Technology South Korea 3.3
Trip.com Group, Ltd. Consumer Discretionary China/Hong Kong 3.1
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 2.9
KE Holdings, Inc. Real Estate China/Hong Kong 2.6
TOTAL 45.5

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 40.4 27.4 13.0
Consumer Discretionary 24.3 13.5 10.8
Financials 11.3 20.2 -8.9
Communication Services 8.9 9.1 -0.2
Industrials 5.5 7.7 -2.2
Energy 3.9 4.0 -0.1
Health Care 2.2 3.6 -1.4
Real Estate 0.8 2.6 -1.8
Materials 0.0 4.7 -4.7
Consumer Staples 0.0 4.4 -4.4
Utilities 0.0 2.7 -2.7
Cash and Other Assets, Less Liabilities 2.8 0.0 2.8

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

Country Fund Benchmark Difference
India 24.1 20.6 3.5
China/Hong Kong 23.7 34.1 -10.4
Taiwan 18.6 20.4 -1.8
South Korea 13.8 14.9 -1.1
United States 8.7 0.0 8.7
Singapore 3.0 3.6 -0.6
Indonesia 2.4 2.2 0.2
Netherlands 2.0 0.0 2.0
Brazil 1.0 0.0 1.0
Thailand 0.0 1.8 -1.8
Malaysia 0.0 1.6 -1.6
Philippines 0.0 0.7 -0.7
Macau 0.0 0.2 -0.2
Cash and Other Assets, Less Liabilities 2.8 0.0 2.8

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 70.9 60.4 10.5
Large Cap ($10B-$25B) 14.3 21.0 -6.7
Mid Cap ($3B-$10B) 11.1 17.7 -6.6
Small Cap (under $3B) 0.9 0.9 0.0
Cash and Other Assets, Less Liabilities 2.8 0.0 2.8

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 $0.00018 $0.00000 $0.00000 $0.00018 0.0% N.A.
12/13/2022 12/14/2022 $0.00000 $0.00000 $3.00231 $3.00231 20.4% N.A.
12/14/2021 12/15/2021 $0.00000 $1.10849 $3.22827 $4.33676 18.4% N.A.
12/15/2020 12/16/2020 $0.00000 $0.13545 $0.31069 $0.44614 1.8% N.A.
12/16/2019 12/17/2019 $0.00000 $0.00000 $0.04272 $0.04272 0.3% N.A.

 

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, 2024

Market Environment

  • The first quarter of the year was a period of contrast across markets in Asia. In particular, markets linked to technology, communication services and the global supply chains of semiconductors and artificial intelligence (AI) benefited while other interest-rate sensitive areas were held back by a reset in expectations as to the trajectory of U.S. Federal Reserve cuts. In terms of markets, Taiwan and India were the strongest performing markets while China/Hong Kong struggled.   
  • India outperformed the broad emerging markets though there was some consolidation over concerns regarding elevated valuations. Unique characteristics underpinning India’s elevated valuations include having one of the world’s highest nominal GDP growth rates supported by higher-than-market earnings growth and a long runway of powerful demographics and wage growth.
  • Taiwan did well thanks to its exposure to global supply chains in technology. Its strong ties to the rapidly growing contribution of generative AI to economies and world trade helped.
  • Chinese stocks were volatile in the first quarter but rebounded from January’s sell-off as investors weighed positive statements from the Chinese government regarding its 5% GDP growth target, efforts to underpin the local stock markets via ETF purchases and green-shoots of improvement in corporate earnings revisions.

Contributors and Detractors

  • For the quarter ended March 31, 2024, the Asia Innovators Fund returned 7.2%, (Investor Class) and 7.18% (Institutional Class) while its benchmark, the MSCI All Country Asia ex Japan Index, returned 2.44% over the same period.
  • The top three contributors to relative performance, on a country basis, were the U.S. due to an off-benchmark allocation, and India and China/Hong Kong due to stock selection. The top three detractors to relative performance were Taiwan due to an underweight allocation, Singapore due to stock selection and the Philippines due to zero allocation.
  • The top three contributors to relative performance, on a sector basis, were information technology (IT) and consumer discretionary due to stock selection, and materials due to an underweight allocation. The top three detractors to relative performance were communication services due to stock selection, utilities due to an underweight allocation and industrials due to stock selection.
  • The largest contributors to absolute performance during the quarter included NVIDIA, a U.S. specialist semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company, a leading Taiwanese chip manufacturer, and Zomato, a leading Indian online restaurant booking and food delivery company. The top three detractors to performance included Pinduoduo (PDD), one of China’s largest e-commerce platforms that started its businesses with a focus on lower-tier city, price sensitive consumers, One 97 Communications, an Indian mobile-internet company offering online payment services, and Alibaba Group, the largest e-commerce company in China.

Outlook

  • As we look out to the rest of the year, we see three reasons to be positive on markets in Asia. The first is the natural recovery that is taking hold after COVID. Economic growth is picking up and is being driven by domestic consumption. Secondly, when interest rates are cut in the U.S., we should see a cyclical pickup, particularly in markets like South Korea and Taiwan. Thirdly, we expect the second half of the year to yield slightly better news for China. We think earnings will continue to improve and there will be more initiatives to support the consumer.
  • The ascendance of AI across all economic activity and industries across the globe, we believe, will continue to be a growth driver for computer hardware, chip and equipment makers in Taiwan and across other markets in the region including South Korea and China.

 

View the Fund’s Top 10 holdings as of March 31, 2024. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MATFX as of 03/31/2024
1YR 3YR 5YR 10YR Since Inception Inception Date
2.76% -11.50% 7.29% 8.01% 4.46% 12/27/1999

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. For the Fund's most recent month-end performance visit matthewsasia.com

Fees & Expenses
Gross Expense Ratio 1.15%

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.

 

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.