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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

-4.08%

YTD Return

(as of 03/22/2023)

$21.19

NAV

(as of 03/22/2023)

-0.09

1 Day NAV Change

(as of 03/22/2023)

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 $579.87 million (02/28/2023)
Currency USD
Ticker MINDX
Cusip 577-130-859
Portfolio Turnover 41.4%
Benchmark S&P Bombay Stock Exchange 100 Index
Geographic Focus India
Fees & Expenses
Gross Expense Ratio 1.10%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 02/28/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund - MINDX
10/31/2005
MINDX
-1.69% -7.29% -2.49% -6.45% 7.90% 2.01% 8.79% 9.32%
S&P Bombay Stock Exchange 100 Index
-3.08% -9.17% -4.54% -4.60% 12.36% 6.33% 8.76% 9.74%
As of 12/31/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews India Fund - MINDX
10/31/2005
MINDX
-4.92% 0.58% -9.92% -9.92% 7.41% 2.00% 8.70% 9.57%
S&P Bombay Stock Exchange 100 Index
-4.85% 3.40% -4.53% -4.53% 10.51% 6.60% 8.88% 10.13%
For the years ended December 31st
Name 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Matthews India Fund - MINDX
MINDX
-9.92% 18.11% 16.45% -0.88% -10.09% 35.79% -1.23% 0.90% 63.71% -5.90%
S&P Bombay Stock Exchange 100 Index
-4.53% 24.08% 13.92% 8.53% -6.00% 41.88% 2.32% -6.41% 31.40% -4.70%

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 12/31/2022)

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 21 funds
  • 3 YEAR
  • out of 21 funds
  • 5 YEAR
  • out of 18 funds
  • 10 YEAR
  • out of 17 funds
  • 1 YEAR
  • 2nd
  • 11 out of 23 funds
  • 3 YEAR
  • 3rd
  • 16 out of 22 funds
  • 5 YEAR
  • 4th
  • 15 out of 18 funds
  • 10 YEAR
  • 2nd
  • 5 out of 17 funds
  • SINCE INCEPTION
  • n.a.
  • 1 out of 2 funds

Ratings agency calculation methodology

Portfolio Managers

Peeyush  Mittal, CFA photo
Peeyush Mittal, CFA

Lead Manager

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Co-Manager

Portfolio Characteristics

(as of 12/31/2022)
Fund Benchmark
Number of Positions 48 101
Weighted Average Market Cap $45.2 billion $63.2 billion
Active Share 53.3 n.a.
P/E using FY1 estimates 24.4x 22.6x
P/E using FY2 estimates 20.1x 19.1x
Price/Cash Flow n.a. 14.7
Price/Book 3.9 3.3
Return On Equity 16.3 18.1
EPS Growth (3 Yr) 13.6% 21.1%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 12/31/2022)
-2.22%
Alpha
0.96
Beta
77.19%
Upside Capture
89.75%
Downside Capture
0.27
Sharpe Ratio
-0.49
Information Ratio
6.33%
Tracking Error
93.74

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 02/28/2023)
Name Sector % Net Assets
HDFC Bank, Ltd. Financials 7.9
ICICI Bank, Ltd. Financials 7.1
Infosys, Ltd. Information Technology 5.3
Shriram Finance, Ltd. Financials 5.0
Tata Consultancy Services, Ltd. Information Technology 4.8
Hindustan Unilever, Ltd. Consumer Staples 3.9
Axis Bank, Ltd. Financials 3.5
Maruti Suzuki India, Ltd. Consumer Discretionary 3.1
Dabur India, Ltd. Consumer Staples 3.0
Reliance Industries, Ltd. Energy 3.0
TOTAL 46.6

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 12/31/2022)
  • Sector Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Financials 41.3 35.5 5.8
Consumer Discretionary 12.6 7.4 5.2
Information Technology 12.4 12.6 -0.2
Consumer Staples 9.1 9.2 -0.1
Materials 6.9 8.3 -1.4
Industrials 6.7 6.3 0.4
Health Care 5.7 3.6 2.1
Energy 3.3 11.2 -7.9
Communication Services 0.5 2.9 -2.4
Utilities 0.0 2.5 -2.5
Real Estate 0.0 0.4 -0.4
Cash and Other Assets, Less Liabilities 1.5 0.0 1.5

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) 51.9 68.5 -16.6
Large Cap ($10B-$25B) 10.9 19.5 -8.6
Mid Cap ($3B-$10B) 23.1 11.4 11.7
Small Cap (under $3B) 12.6 0.6 12.0
Cash and Other Assets, Less Liabilities 1.5 0.0 1.5

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)
12/13/2022 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, 2022

For the year ending December 31, 2022, the Matthews India Fund returned -9.92% (Investor Class) and -9.83% (Institutional Class), while its benchmark, the S&P Bombay Stock Exchange 100 Index, returned -4.53% over the same period. For the fourth quarter, the Fund returned 0.58% (Investor Class) and 0.57% (Institutional Class), while the benchmark returned 3.40%.

Market Environment:

Central banks maintained their war against inflation with higher interest rates globally during 2022. Even though inflation has generally subsided in the past few months, the pace of moderation has been behind the estimations of most. As a consequence, it’s expected that higher rates will be here for longer even as the pace of incremental rate hikes slows.

To complicate this dynamic, we’re also seeing China remove its entrenched zero-COVID restrictions. As activity in the world’s second-largest economic power starts to normalize it will help improve global gross domestic production (GDP) but it’s also likely to exert upward pressure on inflation. Hence, it’s reasonable to assume that central banks are unlikely to start to ease monetary policy anytime soon.

In India, the rupee continues to be range-bound but given the current interest rate policy it remains to be seen if that will stay the case. The differential between central bank rate policy in the U.S. and in India is at its lowest for the last 15 years, which suggests that outflow of dollar reserves from India will remain a risk in a near to medium term and the rupee will continue to be volatile.

Separately, consumption in India continues to moderate. Amid inflationary pressures, consumption is negatively impacted in lower-income sections of the economy. However, we are beginning to see some pick-up in nominal wage growth in rural India along with higher remittance which should help alleviate a cash crunch in non-urban areas of the country.

Performance Contributors and Detractors:

At the sector level, our underweight in energy was the biggest contributor to relative performance in the year as oil marketing firm margins were negatively impacted by the high price of oil. Our overweight to industrials was also a positive contributor to performance as manufacturing activity in India continues to gather pace. On the other hand, our stock selection within consumer staples was the biggest detractor to performance. Stock selection within information technology, consumer discretionary and financials was also a detractor though the negative impact from financials was mitigated to a degree by our overweight position.

In the last quarter, our allocation and stock selection in consumer staples and communication services was the biggest contributor. On the flip side, allocation and stock selection in consumer discretionary was the biggest detractor, impacted by our holdings in the interest rate-sensitive autos segment.

At the holdings level, Lemon Tree Hotels and Cummins India were among the top contributors to performance for the year. Cummins is one of the largest manufacturers of engines globally and within India, it is a leading provider of back-up power generating units. A revival in infrastructure and real estate along with robust exports in India helped the company post robust revenue and earnings growth.

Conversely, Infosys and Tata Consultancy Services were among the biggest detractors and were hurt by softening demand from Western and international clients. Restaurant Brands Asia was also a detractor. While the company continues to grow well and execute on plans for network expansion, high inflation resulted in profit margin-performance being slightly behind investor expectation which negatively impacted performance.

Notable Portfolio Changes:

We continued to consolidate the portfolio and reduce the number of holdings in the Fund in favor of companies which we think are more insulated from external headwinds and where growth expectations are reasonable. To this end, we exited Gujarat Fluorochemicals, a leading producer of fluoropolymers. The company has benefited from higher pricing for many of its manufactured products due to the pandemic restrictions in China but with China reopening we think some of those tailwinds will convert into headwinds. We also exited ABB India. The engineering and construction company continues to do well; however the valuation is very rich and with global GDP slowing down we believe it is prudent to exit.

We initiated a position in Syngene International, a contract research service (CRS) provider. Syngene continues to benefit from greater outsourcing of research projects by big pharma globally. The company also recently got certification from the U.S. Food and Drug Administration (FDA) to commence operations of its biologics manufacturing facility, which would mark the beginning of its custom development and manufacturing operations (CDMO). The CDMO business will help Syngene deliver higher growth and diversify its business model, in our view.

Outlook:

We continue to remain cautious for the near-term outlook. While inflation has peaked and it seems like we are nearing the end of rate tightening globally, we expect rates are going to remain higher for longer and consequently it is going to have a negative impact on demand for goods and services globally. Reduced economic activity globally is going to have a negative impact on exports from India in the near to medium term. Amid low exports and higher rates in the developed world, the rupee may continue to have a depreciation bias unless oil prices decline.

Despite the external headwinds, we think the financial services sector in India continues to be in a very healthy state. Even if we have a slowdown, we don’t expect private and public sector banks to have credit quality challenges which would mean any slowdown would be short lived and would not lead to market panic. Banks, however, are increasing deposit rates and these are becoming attractive from an investment perspective. We think this is likely to pose the biggest risk to markets in India in the near term given the fact that current equity valuations leave little room to absorb negative surprises.

India’s government will also shortly be presenting its budget and since there are general elections next year this event will take on greater importance. There are widespread expectations that the government will announce an increase in spending at the grass roots and rural level where large chunks of the population live. While this would be helpful in improving consumption, a higher-than-normal fiscal deficit will only heighten existing inflationary challenges. Another cause of concern relates to expectations that the government is likely to raise long-term capital gains tax on equity investments from current 10% to 20%. If that were to happen it will likely create negative sentiment in the market at least in the interim.

Top 10 holdings as of December 31, 2022. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MINDX as of 12/31/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-9.92% 7.41% 2.00% 8.70% 9.57% 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 1.10%

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 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.