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Matthews Pacific Tiger Fund
MAPTX

Snapshot
  • Seeks alpha in Asia’s emerging economies by capitalizing on the rising Asia consumer
  • High-conviction equity portfolio focused on sustainable growth companies
  • All-cap fundamental approach driven by on-the-ground, proprietary research

09/12/1994

Inception Date

-17.79%

YTD Return

(as of 08/09/2022)

$22.64

NAV

(as of 08/09/2022)

-0.03

1 Day NAV Change

(as of 08/09/2022)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Pacific Tiger 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 Ex Japan. 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 09/12/1994
Fund Assets $5.32 billion (07/31/2022)
Currency USD
Ticker MAPTX
Cusip 577-130-107
Portfolio Turnover 46.6%
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia Ex Japan - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region, excluding Japan
Fees & Expenses
Gross Expense Ratio 1.06%
Net Expense Ratio 1.03%

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 Pacific Tiger Fund - MAPTX
09/12/1994
MAPTX
-1.05% -2.42% -17.83% -20.98% 2.16% 2.50% 6.09% 7.71%
MSCI All Country Asia ex Japan Index
-1.13% -5.03% -17.09% -19.65% 2.61% 2.08% 5.40% 4.21%
As of 06/30/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund - MAPTX
09/12/1994
MAPTX
-3.22% -6.12% -16.96% -24.82% 1.70% 3.22% 6.19% 7.78%
MSCI All Country Asia ex Japan Index
-4.40% -8.90% -16.14% -24.78% 2.41% 3.39% 5.80% 4.27%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Pacific Tiger Fund - MAPTX
MAPTX
-4.41% 28.83% 10.72% -11.11% 39.96% -0.16% -1.30% 11.79% 3.63% 21.00%
MSCI All Country Asia ex Japan Index
-4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70%

MSCI AC Asia ex Japan Index since inception value calculated from 08/31/94.

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 54 funds
  • 3 YEAR
  • out of 54 funds
  • 5 YEAR
  • out of 49 funds
  • 10 YEAR
  • out of 36 funds
  • 1 YEAR
  • 2nd
  • 17 out of 36 funds
  • 3 YEAR
  • 3rd
  • 21 out of 35 funds
  • 5 YEAR
  • 3rd
  • 17 out of 31 funds
  • 10 YEAR
  • 1st
  • 4 out of 21 funds
  • SINCE INCEPTION
  • 2nd
  • 2 out of 5 funds

Ratings agency calculation methodology

Portfolio Managers

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Lead Manager

Inbok  Song photo
Inbok Song

Lead Manager

Winnie  Chwang photo
Winnie Chwang

Co-Manager

Andrew  Mattock, CFA photo
Andrew Mattock, CFA

Co-Manager

Portfolio Characteristics

(as of 06/30/2022)
Fund Benchmark
Number of Positions 59 1,201
Weighted Average Market Cap $104.8 billion $110.6 billion
Active Share 68.4 n.a.
P/E using FY1 estimates 18.7x 11.6x
P/E using FY2 estimates 15.8x 10.7x
Price/Cash Flow 13.4 7.1
Price/Book 3.0 1.6
Return On Equity 16.1 14.5
EPS Growth (3 Yr) 9.8% 11.2%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 06/30/2022)
-0.55%
Alpha
1.01
Beta
92.18%
Upside Capture
96.92%
Downside Capture
0.06
Sharpe Ratio
-0.13
Information Ratio
5.49%
Tracking Error
90.44

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
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 6.9
Samsung Electronics Co., Ltd. Information Technology South Korea 3.6
ICICI Bank, Ltd. Financials India 3.0
Tencent Holdings, Ltd. Communication Services China/Hong Kong 3.0
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 2.8
Central Pattana Public Co., Ltd. Real Estate Thailand 2.8
SM Prime Holdings, Inc. Real Estate Philippines 2.8
Kweichow Moutai Co., Ltd. Consumer Staples China/Hong Kong 2.6
Meituan Consumer Discretionary China/Hong Kong 2.6
Ashok Leyland, Ltd. Industrials India 2.4
TOTAL 32.5

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 06/30/2022)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 20.7 21.4 -0.7
Consumer Discretionary 19.3 15.8 3.5
Financials 14.8 20.4 -5.6
Industrials 11.2 6.6 4.6
Consumer Staples 9.1 5.3 3.8
Real Estate 7.5 4.1 3.4
Communication Services 7.2 10.4 -3.2
Materials 4.0 5.2 -1.2
Health Care 2.7 4.0 -1.3
Utilities 2.7 3.1 -0.4
Energy 0.0 3.7 -3.7
Cash and Other Assets, Less Liabilities 0.8 0.0 0.8

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 46.2 47.3 -1.1
Taiwan 15.1 16.0 -0.9
India 13.9 14.2 -0.3
South Korea 9.8 12.5 -2.7
Indonesia 3.5 2.0 1.5
Singapore 3.3 3.4 -0.1
Thailand 3.3 2.1 1.2
Philippines 2.8 0.8 2.0
Vietnam 1.1 0.0 1.1
Malaysia 0.0 1.6 -1.6
Cash and Other Assets, Less Liabilities 0.8 0.0 0.8

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 48.4 58.6 -10.2
Large Cap ($10B-$25B) 24.4 21.1 3.3
Mid Cap ($3B-$10B) 23.0 18.5 4.5
Small Cap (under $3B) 3.4 1.7 1.7
Cash and Other Assets, Less Liabilities 0.8 0.0 0.8

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)
12/14/2021 12/15/2021 $0.00000 $0.50110 $5.35902 $5.86012 17.4% 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 Pacific Tiger Fund returned -16.96% (Investor Class) and -16.91% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned -16.14% over the same period. For the quarter ending June 30, 2022, the Fund returned -6.12% (Investor Class) and -6.12% (Institutional Class), while the benchmark returned -8.90%.

Market Environment:

The first half of the year was a challenging period. The Asia ex Japan region experienced a largely similar rate of decline in the first and second quarters but the factors influencing the decline were quite different. In the first quarter, Chinese equities and consumer discretionary sector were among the worst performing but recovered nicely to be the best performing in the second quarter. On the flip side, some of the ASEAN (Association of Southeast Asian Nations) equities went from being the best performing in the first quarter to the worst detractors in the second quarter. The biggest driver of this change is ongoing evolution of investor perception of China, and the uncertainty around its zero-COVID policy which is curbing domestic consumption. High energy prices are an additional tax for consumers and companies in South Asia and has weighed on equity returns particularly in the second quarter. In addition, small caps have continuously underperformed this year reflecting concerns around rising cost of capital and weak domestic demand in many parts of Asia, but this follows past few years of outsized returns.

Foreign exchange trends have remained consistent through the first half reflecting some depreciation for Southeast Asia currencies and the Indian rupee. However, there was a sharp change in the trend for the Chinese renminbi which depreciated by about 3% late in April—in spite of that move, the renminbi trades at roughly the same level compared to three years ago.

Performance Contributors and Detractors:

For the first half of 2022, stock selections in the Philippines, Indonesia and India contributed the most to the Fund’s relative performance. Southeast Asian countries and India have shown late but sustained economic recovery from the pandemic. On the other hand, stock selection within China and South Korea detracted the most from relative performance as a resurgence of COVID in China and global macro concern with interest rate hiking cycle negatively affected South Korea. It is notable that underperformance within China was more concentrated in the first quarter. Some of that relative underperformance was recovered during the second quarter, given the emergence of supporting policies during the quarter from the Chinese government. Thus, during the second quarter, the Fund’s holdings such as China Tourism Group, a China-based company principally engaged in the travel agency and duty-free businesses and Kweichow Moutai, China’s premier white liquor business, contributed positively. Expectation for the travel resumption for China Tourism Group and resilient operation for Kweichow Moutai with relatively attractive valuations supported performance of these companies. On the other hand, continuous concern on the macro environment further dragged down South Korea holdings into the second quarter. For example, industrial holdings such as Doosan Bobcat, a construction machinery manufacturer, underperformed with a concern on upcoming headwinds though current earning has been resilient.

From a sector perspective, real estate and industrials were positive contributors during the first half, helped by our holdings in shopping mall companies in the Philippines and Thailand with improved foot traffic, and commercial vehicle manufacturer in India as vehicle sales have been improving. Meanwhile, communication services was the major detractor. Fund’s holdings in South Korea’s communication service sector such as Naver Corp., a search engine and internet content provider and Hybe Co., an artist management company, underperformed with potentially weakening demand, increased cost burden together with relatively high valuation to begin with.

Notable Portfolio Changes:

We increased the portfolio’s weight in China added to existing holdings such as China Tourism Group and Meituan, web-based shopping platform company, as valuations became more attractive while long-term earning generation capability are intact. We believe these companies are likely to benefit from a recovery in domestic consumption. This was funded by trimming positions in the IT sector in South Korea and Taiwan. Though these IT companies have strong fundamentals, near-term earnings uncertainty risk has increased as these companies are exposed to the global demand environment.

We also exited positions with demanding valuation with deteriorating earning visibility. This is a part of efforts to manage the downside risk and reallocate capital into the areas where we see better earning visibility with certain valuation supports. SEA, an internet gaming and e-commerce company in Singapore, is an example. While the company has achieved impressive track record in establishing sizable market share across different countries, increased uncertainty around their internet gaming as a “cash cow” may delay the expected profitability goal amid continuous needs for e-commerce investment.

Although the portfolio’s number of holdings has decreased to a near-term low, especially in China, it is quite likely that the position count may increase into the second half of 2022 as we look to benefit from cheaper valuations.

Outlook:

Looking ahead, the Asia ex Japan region is in a relatively better situation from a macroeconomic standpoint as the inflationary pressures are not as severe as in the West, and several countries are still in the process of recovering fully from COVID-19 related disruptions. In particular, China is positioned well for a pickup in domestic activity as the government is starting to support consumers and small and medium-sized 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 like in Southeast Asia stand to benefit from resumption of tourism activities.

The earnings picture looks a bit mixed largely because of downgrades earlier in the year in China as several key cities were locked down, but that is changing for the better. Valuations have eased to low-teens P/E ratio while the projected earning growth (average) over the next two years for the MSCI Asia ex Japan Index is in the high single digits. We are sanguine about the potential economic recovery in parts of Asia and are looking to position the portfolio to participate in that growth.

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 - MAPTX as of 06/30/2022
1YR 3YR 5YR 10YR Since Inception Inception Date
-24.82% 1.70% 3.22% 6.19% 7.78% 09/12/1994

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 1.06%
Net Expense Ratio 1.03%

Matthews has contractually agreed to waive fees and reimburse expenses to limit the Total Annual Fund Operating Expenses until April 30, 2023. Please see the Fund’s prospectus for additional details.

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.