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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

6.07%

YTD Return

(as of 02/27/2024)

$27.97

NAV

(as of 02/27/2024)

+0.06

1 Day NAV Change

(as of 02/27/2024)

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 $795.54 million (01/31/2024)
Currency USD
Ticker MINDX
Cusip 577-130-859
Portfolio Turnover 41.4%
Benchmark S&P Bombay Stock Exchange 100 Index MSCI India Index
Geographic Focus India
Fees & Expenses
Gross Expense Ratio 1.15%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 01/31/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund - MINDX
10/31/2005
MINDX
3.15% 14.86% 3.15% 28.01% 11.81% 9.88% 12.49% 10.42%
S&P Bombay Stock Exchange 100 Index
0.85% 15.71% 0.85% 25.36% 14.24% 13.20% 12.32% 10.78%
MSCI India Index
2.42% 18.18% 2.42% 28.02% 14.22% 13.10% 10.77% 9.86%
As of 12/31/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund - MINDX
10/31/2005
MINDX
4.50% 8.68% 23.10% 23.10% 9.41% 8.62% 11.65% 10.28%
S&P Bombay Stock Exchange 100 Index
8.30% 11.38% 22.44% 22.44% 13.20% 12.39% 11.65% 10.78%
MSCI India Index
8.11% 11.98% 21.29% 21.29% 12.43% 12.12% 10.08% 9.76%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Matthews India Fund - MINDX
MINDX
23.10% -9.92% 18.11% 16.45% -0.88% -10.09% 35.79% -1.23% 0.90% 63.71%
S&P Bombay Stock Exchange 100 Index
22.44% -4.53% 24.08% 13.92% 8.53% -6.00% 41.88% 2.32% -6.41% 31.40%
MSCI India Index
21.29% -7.49% 26.66% 15.90% 7.58% -7.30% 38.76% -1.43% -6.12% 23.87%

Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.

MSCI and MICM are the sources of MSCI India Index performance data.

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 12/31/2023)

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 22 funds
  • 3 YEAR
  • out of 22 funds
  • 5 YEAR
  • out of 20 funds
  • 10 YEAR
  • out of 17 funds
  • 1 YEAR
  • 2nd
  • 7 out of 22 funds
  • 3 YEAR
  • 2nd
  • 10 out of 22 funds
  • 5 YEAR
  • 4th
  • 19 out of 20 funds
  • 10 YEAR
  • 2nd
  • 5 out of 17 funds
  • SINCE INCEPTION
  • 2nd
  • 1 out of 2 funds

Ratings agency calculation methodology

Portfolio Managers

Peeyush  Mittal, CFA photo
Peeyush Mittal, CFA

Lead Manager

Swagato  Ghosh photo
Swagato Ghosh

Co-Manager

Portfolio Characteristics

(as of 12/31/2023)
Fund Benchmark
Number of Positions 70 101
Weighted Average Market Cap $44.1 billion $70.3 billion
Active Share 56.3 n.a.
P/E using FY1 estimates 25.5x 23.0x
P/E using FY2 estimates 20.8x 20.2x
Price/Cash Flow 20.0 15.9
Price/Book 4.3 4.0
Return On Equity 18.4 18.4
EPS Growth (3 Yr) 19.7% 22.2%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 12/31/2023)
-1.63%
Alpha
0.82
Beta
72.29%
Upside Capture
83.13%
Downside Capture
0.54
Sharpe Ratio
-0.73
Information Ratio
5.18%
Tracking Error
88.98

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 01/31/2024)
Name Sector % Net Assets
Reliance Industries, Ltd. Energy 6.9
Shriram Finance, Ltd. Financials 5.4
HDFC Bank, Ltd. Financials 4.9
Infosys, Ltd. Information Technology 4.9
ICICI Bank, Ltd. Financials 4.9
Neuland Laboratories, Ltd. Health Care 3.7
Tata Consultancy Services, Ltd. Information Technology 2.9
IndusInd Bank, Ltd. Financials 2.7
Bharat Heavy Electricals, Ltd. Industrials 2.5
Axis Bank, Ltd. Financials 2.4
TOTAL 41.2

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 12/31/2023)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Financials 34.2 33.0 1.2
Information Technology 14.1 11.5 2.6
Consumer Discretionary 12.7 9.9 2.8
Industrials 11.8 7.6 4.2
Health Care 9.7 4.0 5.7
Consumer Staples 9.0 10.0 -1.0
Energy 5.3 9.9 -4.6
Materials 4.5 7.8 -3.3
Utilities 1.0 3.1 -2.1
Real Estate 0.8 0.4 0.4
Communication Services 0.2 2.8 -2.6
Liabilities in Excess of Cash and Other Assets -3.3 0.0 -3.3

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 42.5 72.3 -29.8
Large Cap ($10B-$25B) 16.7 19.1 -2.4
Mid Cap ($3B-$10B) 26.7 8.6 18.1
Small Cap (under $3B) 17.4 0.0 17.4
Liabilities in Excess of Cash and Other Assets -3.3 0.0 -3.3

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 $0.50513 $0.00000 $0.30493 $0.81006 3.1% N.A.
12/13/2022 12/14/2022 $0.00000 $0.02887 $3.35147 $3.38034 13.0% 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, 2023

For the year ending December 31, 2023, the Matthews India Fund returned 23.10% (Investor Class) and 23.32% (Institutional Class), while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned 22.44% over the same period. For the fourth quarter, the Fund returned 8.68% (Investor Class) and 8.75% (Institutional Class), while the benchmark returned 11.38%.

Market Environment

High interest rates globally, on the back of monetary policy tightening, continued for most of 2023. Through the course of this year, we saw a substantial cooling off in the price of both hard and soft commodities yet inflation continued to remain higher than the comfort level of most central banks globally. In part this was related to the unfolding Russia-Ukraine and Israel-Gaza military conflicts. These events have led to tightness in energy markets, elevated logistics costs and challenged food supplies which in turn have kept inflation from falling faster.  

India was a bright spot in global markets with strong returns helped by both fundamentals and investor inflows. Domestic economic activity remained strong as the government maintained its infrastructure-related spending momentum. Consumption, however, was soft throughout the year especially at the mid and bottom-end of the income strata. Weak monsoons also delayed recovery in rural demand. In spite of this, GDP growth was above 7% in last three quarters led mainly by government capital expenditure expansion.  

Results of state elections held in the later part of the year increased the probability of political continuity of incumbent Prime Minister Modi in the 2024 general elections. And while foreign flows were supportive, incremental positive domestic flows were a bigger driver of the market in 2023.  

The world is also witnessing an accelerated trend by businesses of all sizes to reset their supply chains and to reduce their dependence on imports from China. Given the political and economic stability of India, more and more businesses are looking to relocate parts of their supply network to India.

Performance Contributors and Detractors

For the year, stock selection in health care, financials and information technology (IT) were the biggest contributors to relative performance. On the other hand, an underweight in utilities was the biggest detractor to relative performance. Stock selection in consumer discretionary and consumer staples were also big detractors for the year. 

At the holdings level, Neuland Laboratories, Shriram Finance and Cholamandalam Investment and Finance Co. were among the top contributors to performance for the year. Neuland is an API (active pharmaceutical manufacturing) company which executed its business strategy throughout the year and posted robust numbers. Shriram and Chola are non-bank financial institutions (NBFCs) which executed well on book growth and diversification, while maintaining good credit quality during the year.  

At the other end of the spectrum, Cognizant Technology Solutions, Dabur India and Restaurant Brands Asia were among the weaker performers. IT services like Cognizant were generally hurt by softening demand, especially from the U.S. Consumption stocks like Dabur and Restaurant Brands were impacted by a lack of revival in consumer demand in their specific categories.  

Notable Portfolio Changes

This year, we sought to improve our holdings in sectors like consumer discretionary and staples and invested in names where growth visibility is higher. To that extent we initiated a position in Sona BLW Precision Forgings. The company’s differentiated capabilities in auto components, especially for electric vehicles (EV), gives it a sustainable competitive advantage, we believe, and hence has a long runway for growth. We exited our position in Bosch, the Indian arm of German automotive supplier Robert Bosch, as we felt the company’s growth trajectory was stagnating and the technological edge globally was not translating into business momentum in India. Similarly, we exited Dabur India which we believe has become a growth laggard within the staples space and there is no visibility on why that might change in the future.  

Elsewhere, we initiated a position in Mahindra & Mahindra Financial Services to leverage the trend of NBFCs growing strongly in a strong credit growth cycle, with improving asset quality. We also exited our position in Crompton Greaves, driven by findings from our primary research process which suggested a breakdown in sales and marketing strategy and internal turmoil due to employee attrition at all levels.  

Outlook 

We remain optimistic about the near-term outlook for India. Inflation and interest rates have peaked out and future actions by the Indian central bank on interest rates or on liquidity should boost growth, we believe in the coming year. The government should continue its infrastructure related spend, in our view, albeit with a hiatus of few months around the elections. We believe consumption growth should also come back sooner rather than later as the prior year’s base becomes more favorable and real income growth returns. We prefer domestic sectors like real estate, utilities and financial services and other sectors like manufacturing where there are clear tailwinds from China +1 strategies among multinational companies.  

We believe the government’s focus on establishing India as a manufacturing hub, to replace imports and to tap export opportunities, will continue and may even gather steam as global volatility increase. Sectors like auto and chemicals are well poised to benefit from this.  

Residential real estate is in the midst of an extended up-cycle which will benefit housing developers and ancillary companies. Stricter regulations and consolidation on the supply side over the last decade has led to a much cleaner property market in India with many more investment opportunities now available. 

India is also embarking on a massive power capacity augmentation over the next decade, most of which will be renewable. For this year we see growth in domestic demand for energy and the need for energy security will be strong narratives for utility and renewables companies. Global macro volatility will impact India but to a lesser extent than many other economies. All in all, unless there are any major external or internal shocks, we believe India should have another good year in terms of economic growth and stock market performance.

 

Top 10 holdings as of December 31, 2023. Current and future holdings are subject to change and risk.

Definitions:

The Nifty Midcap 150 Index represents 150 companies ranked 101-250 based on the market capitalization of the Nifty 500. The index represents about 15% of the free float market capitalization of the National Stock Exchange (NSE) of India.

The Purchasing Managers’ Index (PMI): A measure of the prevailing direction of economic trends in manufacturing and service sectors and based on a monthly survey of supply chain managers. The headline PMI is a number from 0 to 100. Above 50 represents an expansion compared with the previous month, under 50 represents a contraction, while a reading at 50 indicates no change.

Average Annual Total Returns - MINDX as of 12/31/2023
1YR 3YR 5YR 10YR Since Inception Inception Date
23.10% 9.41% 8.62% 11.65% 10.28% 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 1.15%

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 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 Benchmark used for comparison under "Portfolio Breakdown" and "Portfolio Characteristics" is the S&P Bombay Stock Exchange 100 index.

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.