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Matthews Asian Growth and Income Fund
MACSX

Snapshot
  • Seeks upside participation while aiming to provide some downside protection in Asia ex Japan
  • Utilize income-paying equities and convertible bonds to help mitigate downside risk and volatility
  • Offers a relatively stable means of participating in Asia’s long-term growth

09/12/1994

Inception Date

-1.67%

YTD Return

(as of 04/16/2024)

$12.36

NAV

(as of 04/16/2024)

-0.09

1 Day NAV Change

(as of 04/16/2024)

Objective

Long-term capital appreciation with some current income.

Strategy

Under normal circumstances, the Matthews Asian Growth and Income Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in dividend-paying common stock, preferred stock and other equity securities, and convertible securities as well as fixed-income securities, of any duration or quality, of companies located in Asia. The Fund attempts to offer investors a relatively stable means of participating in a portion of the Asian region’s growth prospects, while providing some downside protection, in comparison to a portfolio that invests purely in common stocks. The strategy of owning convertible bonds and dividend-paying equities is designed to help the Fund to meet its investment objective while helping to reduce the volatility of its portfolio.

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 $305.15 million (03/31/2024)
Currency USD
Ticker MACSX
Cusip 577-130-206
Portfolio Turnover 12.0%
Benchmark MSCI All Country Asia ex Japan 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 Asian Growth and Income Fund - MACSX
09/12/1994
MACSX
0.72% 0.87% 0.87% -1.45% -5.94% 0.90% 1.85% 7.58%
MSCI All Country Asia ex Japan Index
2.58% 2.44% 2.44% 4.36% -6.52% 2.27% 4.49% 4.18%
As of 03/31/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asian Growth and Income Fund - MACSX
09/12/1994
MACSX
0.72% 0.87% 0.87% -1.45% -5.94% 0.90% 1.85% 7.58%
MSCI All Country Asia ex Japan Index
2.58% 2.44% 2.44% 4.36% -6.52% 2.27% 4.49% 4.18%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Matthews Asian Growth and Income Fund - MACSX
MACSX
3.33% -18.43% 0.04% 16.00% 17.26% -10.96% 21.85% 1.34% -4.50% -0.65%
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 8/31/94.

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 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.

Yield

(as of 03/31/2024)
2.32% 30-Day SEC Yield
2.32% 30-Day SEC Yield (excluding expense waiver)
3.25% Dividend Yield

Dividend Yield (trailing) Source: FactSet Research Systems, Bloomberg, Matthews
30-Day SEC Yield Source: BNY Mellon Investment Servicing (US) Inc.

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
  • 3rd
  • 24 out of 39 funds
  • 3 YEAR
  • 1st
  • 9 out of 38 funds
  • 5 YEAR
  • 3rd
  • 22 out of 37 funds
  • 10 YEAR
  • 4th
  • 23 out of 24 funds
  • SINCE INCEPTION
  • 1st
  • 1 out of 4 funds

Ratings agency calculation methodology

Portfolio Managers

Robert J. Horrocks, PhD photo
Kenneth  Lowe, CFA photo
Kenneth Lowe, CFA

Lead Manager

Siddharth  Bhargava photo
Siddharth Bhargava

Co-Manager

Elli  Lee photo
Elli Lee

Co-Manager

Portfolio Characteristics

(as of 03/31/2024)
Fund Benchmark
Number of Positions 46 1,182
Weighted Average Market Cap $142.7 billion $139.1 billion
Active Share 76.4 n.a.
Price/Cash Flow 9.7 8.4
Price/Book 2.2 1.6
Return On Equity 18.7 14.2
EPS Growth (3 Yr) 8.9% 12.6%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 03/31/2024)
-0.60%
Alpha
0.88
Beta
80.55%
Upside Capture
88.57%
Downside Capture
-0.49
Sharpe Ratio
0.12
Information Ratio
4.91%
Tracking Error
93.93

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 9.6
Tencent Holdings, Ltd. Communication Services China/Hong Kong 5.1
HDFC Bank, Ltd. Financials India 4.1
AIA Group, Ltd. Financials China/Hong Kong 4.0
Samsung Electronics Co., Ltd. Information Technology South Korea 3.7
Tata Consultancy Services, Ltd. Information Technology India 2.7
Macquarie Korea Infrastructure Fund Financials South Korea 2.5
Bank of the Philippine Islands Financials Philippines 2.3
Advantech Co., Ltd. Information Technology Taiwan 2.3
HKT Trust & HKT, Ltd. Communication Services China/Hong Kong 2.2
TOTAL 38.5

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
  • Asset Type Breakdown
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 23.4 27.4 -4.0
Financials 20.5 20.2 0.3
Industrials 12.8 7.7 5.1
Communication Services 12.0 9.1 2.9
Consumer Discretionary 9.6 13.5 -3.9
Consumer Staples 7.3 4.4 2.9
Real Estate 5.3 2.6 2.7
Health Care 3.0 3.6 -0.6
Utilities 2.2 2.7 -0.5
Materials 2.0 4.7 -2.7
Energy 0.0 4.0 -4.0
Cash and Other Assets, Less Liabilities 1.7 0.0 1.7

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 38.9 34.1 4.8
Taiwan 15.8 20.4 -4.6
India 13.8 20.6 -6.8
South Korea 9.6 14.9 -5.3
Singapore 7.8 3.6 4.2
France 3.2 0.0 3.2
Philippines 2.3 0.7 1.6
Indonesia 2.1 2.2 -0.1
New Zealand 1.9 0.0 1.9
United States 1.6 0.0 1.6
Thailand 1.3 1.8 -0.5
Malaysia 0.0 1.6 -1.6
Macau 0.0 0.2 -0.2
Cash and Other Assets, Less Liabilities 1.7 0.0 1.7

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

Asset Type Fund
Common Equities and ADRs 88.6
Convertible Bonds 9.7
Cash and Other Assets, Less Liabilities 1.7
Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 52.4 60.4 -8.0
Large Cap ($10B-$25B) 15.1 21.0 -5.9
Mid Cap ($3B-$10B) 16.7 17.7 -1.0
Small Cap (under $3B) 14.1 0.9 13.2
Cash and Other Assets, Less Liabilities 1.7 0.0 1.7

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 $0.17871 $0.00000 $0.00000 $0.17871 1.5% N.A.
06/27/2023 06/28/2023 $0.16500 $0.00000 $0.00000 $0.16500 1.3% 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 Asian Growth and Income Fund returned 3.33% (Investor Class) and 3.39% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 6.34% over the same period. For the fourth quarter, the Fund returned 6.10% (Investor Class) and 6.10% (Institutional Class), while the benchmark returned 6.48%.

Market Environment

Asian markets rallied during the final quarter of the year, helping drive full-year performance into positive territory although lagging behind the returns of other major geographies. The year started brightly with the hope of a strong recovery in the Chinese economy after reopening from prior COVID restrictions. This was, however, short lived with markets in China peaking in January and then ending the year down double digits. Issues such as the challenged property market, soft consumer sentiment, regulatory changes, dampened animal spirits and geopolitical tensions all weighed on China as the market ended the year at around 9 x earnings. Elsewhere in the region, India was again a strong performer rising over 20% as it benefited in part from capital flows as earnings delivery was robust while the political and monetary outlooks also appear supportive. The technology heavy markets of South Korea and Taiwan also made meaningful gains in 2023.

Performance Contributors/Detractors

At the country level, the portfolio’s underweights in India and Taiwan as well as stock selections in those markets were the biggest detractors to relative returns in 2023, in part because these markets outperformed the broader region. Stock selection within Thailand and an underweight to South Korea also hindered relative performance. Conversely, the portfolio’s off-benchmark positions in the U.S. and Australia were significant contributors to relative returns as these markets delivered reasonable returns while the portfolio’s stocks in these geographies gained meaningfully. Despite the negative of an overweight in China/Hong Kong, stock selection there helped relative performance, as did stock selection within Indonesia.

At the sector level, stock selection in the areas of consumer discretionary and financials detracted from relative performance. On the other hand, stock selection within real estate and industrials contributed.

At the holdings level, one of the largest detractors to relative performance for the year was Chinese auto dealership company Zhongsheng Group. The stock’s drop may have been driven by concerns around new car margins as well as overall new car sale volumes. JD.com, a major internet retailer in China, also fell significantly, likely given the backdrop of a soft consumer as well as rising competitive intensity in the industry. Digital Telecommunications Infrastructure Fund in Thailand, an entity that owns telecom infrastructure, detracted from returns as concerns exist around rising interest rates and the possibility of reduced leases. Leading regional life insurer AIA Group also detracted. Although the company continued to deliver what we believe was robust value of new business growth, the stock was weak. This is potentially due to concerns over the growth and margin profile of its expansion in China combined with overall negative sentiment for the market.

On the other hand, the largest contributor to relative performance was semiconductor and infrastructure software company Broadcom. The stock rose significantly during the year as earnings increased by double digits with management stating this was “driven by investments in accelerators and network connectivity for AI by hyperscalers.” The company also completed the major acquisition of VMware. Chinese games company Netease gained over the full year despite concerns at year end around potential new regulations that may impact monetization. This was, to an extent, likely due to strong operational delivery coming in part from a solid game portfolio that includes newer titles as well as robust cost control. Australian gaming content and machine company Aristocrat Leisure rallied during the year. Solid earnings growth alongside the potential of its entry into real money gaming may have helped the stock perform. Elsewhere in technology, industry behemoths TSMC and Samsung gained and were significant contributors to total returns.

Portfolio Activity

We added new positions in a convertible bond of Xero Investments Ltd., a New Zealand-listed cloud-based accounting software company, in two convertible bonds of Taiwanese connector business Bizlink, and in an exchangeable bond of Straits Trading Co. that could convert into ESR Group. These were added as we believe that they are offerings in solid companies with robust credit quality that also offer attractive terms including reasonable yields. 

During the year, we exited our equity holdings in CK Hutchison, Venture Corp., and Sanofi India. Beyond this, a holding in a convertible bond of ESR Group was put back to the company while a convertible bond in China Conch Venture also matured.

Outlook

Monetary policy expectations for the U.S. in 2024 have changed meaningfully in recent months, with hopes that interest rates have peaked and that cuts will return. This helped to propel markets upward as 2023 drew to a close and the trajectory of these alterations, in conjunction with how contained inflation actually is and whether the U.S. can attain a soft landing, will all play a role in determining market movements over the next year. These will also, in part, determine stock prices in Asia in the near term as it may allow some easing while the U.S. dollar could also be impacted. Beyond this, we continue to remain concerned about the challenges that China faces within its own economy as well as broader geopolitical tensions that appear to be structural in nature. While these are reasons for caution there are also reasons to be constructive; weak sentiment, policy flexibility, appealing valuations and an earnings base that companies have potential to grow from, being a few. In India, although valuations are expensive, structural earnings growth appears intact while Taiwan and Korea are also expected to grow reasonably in 2024.

Given what may be a peak in the cost of capital, robust valuations of 12 x FY24 earnings and EPS growth expected to be over 19% for the region in 2024, the outlook for Asia appears solid although scope for volatility remains. We continue to think that a focus on investing in what we believe to be quality companies at reasonable prices that also generally provide some form of current income is well placed to deliver for clients over the long term.


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

 

Average Annual Total Returns - MACSX as of 03/31/2024
1YR 3YR 5YR 10YR Since Inception Inception Date
-1.45% -5.94% 0.90% 1.85% 7.58% 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 1.13%
Yields as of 03/31/2024
30-Day SEC Yield 2.32%
30-Day SEC Yield (excluding expense waiver) 2.32%
Dividend Yield 3.25%

The 30-Day SEC Yield represents net investment income earned by the Fund over the 30-day period ended 03/31/2024, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day SEC Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate. Source: BNY Mellon Investment Servicing (US) Inc.

Dividend Yield (trailing) is the weighted average sum of the dividends paid by each equity security held by the Fund over the last 12 months divided by the current price as of report date. The annualised dividend yield is for the equity-only portion of the Fund and does not reflect the actual yield an investor in the Fund would receive. There can be no guarantee that companies that the Fund invests in, and which have historically paid dividends, will continue to pay them or to pay them at the current rates in the future. A positive distribution yield does not imply positive return, and past yields are no guarantee of future yields.

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.