09/12/1994
Inception Date
3.60%
YTD Return
(as of 03/22/2023)
$12.95
NAV
(as of 03/22/2023)
+0.09
1 Day NAV Change
(as of 03/22/2023)
Long-term capital appreciation with some current income.
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.
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.
| Inception Date | 09/12/1994 | |
| Fund Assets | $601.81 million (02/28/2023) | |
| Currency | USD | |
| Ticker | MACSX | |
| Cusip | 577-130-206 | |
| Portfolio Turnover | 13.2% | |
| Benchmark | MSCI All Country Asia ex Japan Index | |
| Geographic Focus | Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region | |
| Gross Expense Ratio | 1.07% | |
| Objective | Long-term capital appreciation with some current income. |
| Strategy | Under normal circumstances, the Matthews Asian Growth and Income Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in dividend-paying common stock, preferred stock and other equity securities, and convertible securities as well as fixed-income securities, of any duration or quality, of companies located in Asia. The Fund attempts to offer investors a relatively stable means of participating in a portion of the Asian region’s growth prospects, while providing some downside protection, in comparison to a portfolio that invests purely in common stocks. The strategy of owning convertible bonds and dividend-paying equities is designed to help the Fund to meet its investment objective while helping to reduce the volatility of its portfolio. |
| Risks |
Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging and frontier markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets.
The risks associated with investing in the Fund can be found in the prospectus |
MSCI AC Asia ex Japan Index since inception value calculated from 8/31/94.
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
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.
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.
| 30-Day SEC Yield | 2.48% |
| 30-Day SEC Yield (excluding expense waiver) | 2.48% |
| Dividend Yield | 3.31% |
Dividend Yield (trailing) Source: FactSet Research Systems, Bloomberg, Matthews
30-Day SEC Yield Source: BNY Mellon Investment Servicing (US) Inc.
(as of 12/31/2022)
CATEGORY: Pacific/Asia ex-Japan Stk
| OVERALL | 3 stars | out of 48 funds |
| 3 YEAR | 3 stars | out of 48 funds |
| 5 YEAR | 3 stars | out of 44 funds |
| 10 YEAR | 3 stars | out of 32 funds |
(as of 12/31/2022)
CATEGORY: Pacific Ex Japan Funds
| 1 YEAR | 2nd | 9 out of 32 funds |
| 3 YEAR | 3rd | 24 out of 31 funds |
| 5 YEAR | 3rd | 19 out of 29 funds |
| 10 YEAR | 4th | 16 out of 18 funds |
| SINCE INCEPTION | 1st | 1 out of 4 funds |
Ratings agency calculation methodology
Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.
The Overall Morningstar® Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.
Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
Lipper Analytical Services, Inc., rankings are based on total return, including reinvestment of dividends and capital gains for the stated periods. Funds are assigned a rank within a universe of funds similar in investment objective as determined by Lipper. For the absolute rankings shown the lower the number rank, the better the Fund performed compared to other funds in the classification group. Lipper also calculates a quartile ranking which divides the peer group into quartiles to identify funds of similar quality. Funds in the 1st or 2nd quartile had outperformed the average fund in the peer group while funds in the 3rd or 4th quartile had underperformed.
Lead Manager
Chief Investment Officer and Portfolio Manager
Robert Horrocks is Chief Investment Officer and Portfolio Manager at Matthews Asia and has been a Matthews Asia Funds Trustee since 2018. He manages the firm’s Asian Growth and Income and Asia Dividend Strategy and co-manages the Asia ex Japan Total Return Equity Strategy. As Chief Investment Officer, Robert oversees the firm’s investment process and investment professionals and sets the research agenda for the investment team. Before joining Matthews Asia in 2008, Robert was Head of Research at Mirae Asset Management in Hong Kong. From 2003 to 2006, Robert served as Chief Investment Officer for Everbright Pramerica in China, establishing its quantitative investment process. He started his career as a Research Analyst with WI Carr Securities in Hong Kong before moving on to spend eight years working in several different Asian jurisdictions for Schroders, including stints as Country General Manager in Taiwan, Deputy Chief Investment Officer in Korea and Designated Chief Investment Officer in Shanghai. Robert earned his PhD in Chinese Economic History from Leeds University in the United Kingdom, and is fluent in Mandarin.
Lead Manager
Portfolio Manager
Kenneth Lowe is a Portfolio Manager at Matthews Asia and manages the firm’s Asian Growth and Income Asia Dividend and the Asia ex Japan Total Return Equity Strategies. Prior to joining Matthews Asia in 2010, he was an Investment Manager on the Asia and Global Emerging Market Equities Team at Martin Currie Investment Management in Edinburgh, Scotland. Kenneth received an M.A. in Mathematics and Economics from the University of Glasgow.
Co-Manager
Portfolio Manager
Satya Patel is a Portfolio Manager at Matthews Asia and co-manages the Asian Growth and Income Strategy. Prior to joining Matthews Asia in 2011, Satya was an Investment Analyst with Concerto Asset Management. He earned his MBA from the University of Chicago Booth School of Business in 2010. In 2009, Satya worked as an Investment Associate in Private Placements for Metlife Investments and from 2006 to 2008, he was an Associate in Credit Hedge Fund Sales for Deutsche Bank in London. He holds a Master’s in Accounting and Finance from the London School of Economics and a B.A. in Business Administration and Public Health from the University of Georgia. Satya is proficient in Gujarati.
Co-Manager
Portfolio Manager
Siddharth Bhargava is a Portfolio Manager at Matthews Asia and co-manages the firm’s Asian Growth and Income and Asia Dividend Strategies. Prior to joining the firm in 2011, he was an Investment Analyst at Navigator Capital. Siddharth also served as a credit and debt market research assistant to Dr. Edward Altman at the New York University Salomon Center. From 2005 to 2008, he was a Credit Analyst at Sandell Asset Management. Siddharth received a B.A. in Economics from the University of Virginia and an MBA from the Stern School of Busniess at New York University. He is fluent in Hindi and conversational in German.
Sources: Factset Research Systems, Inc.
Fund Risk Metrics are reflective of Investor share class.
Sources: Zephyr StyleADVISOR
Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: BNY Mellon Investment Servicing (US) Inc.
Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.
Not all countries are included in the benchmark index(es).
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.
Visit our Glossary of Terms page for definitions and additional information.
The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI All Country Asia Pacific Index is a free float–adjusted market capitalization–weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Index is a free float-adjusted market capitalization-weighted index of Chinese equities that includes H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges, Hong Kong-listed securities known as Red chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China) and foreign listings (e.g. ADRs).
The MSCI China All Shares Index captures large and mid-cap representation across China A shares, B shares, H shares, Red chips (issued by entities owned by national or local governments in China), P chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g. ADRs). The index aims to reflect the opportunity set of China share classes listed in Hong Kong,Shanghai, Shenzhen and outside of China.
The MSCI Emerging Markets (EM) Asia Index is a free float-adjusted market capitalization weighted index of the stock markets of China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Taiwan and Thailand. The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets ex China Index is a free float-adjusted market capitalization-weighted index that captures large and mid cap representation across 23 of the 24 Emerging Markets (EM) countries excluding China: Brazil, Chile, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Small Cap Index is a free float-adjusted market capitalization weighted small cap index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungry, India, Indonesia, Kuwait, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan Thailand, Turkey and United Arab Emirates.
The S&P Bombay Stock Exchange 100 (S&P BSE 100) Index is a free float–adjusted market capitalization–weighted index of 100 stocks listed on the Bombay Stock Exchange.
The MSCI Japan Index is a free float–adjusted market capitalization–weighted index of Japanese equities listed in Japan.
The Korea Composite Stock Price Index (KOSPI) is a market capitalization–weighted index of all common stocks listed on the Korea Stock Exchange.
The MSCI All Country Asia ex Japan Small Cap Index is a free float–adjusted market capitalization–weighted small cap index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Small Cap Index is a free float-adjusted market capitalization-weighted small cap index of the Chinese equity securities markets, including H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges,Hong Kong-listed securities known as Red Chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs).
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.
Commentary
Period ended December 31, 2022
For the year ending December 31, 2022, the Matthews Asian Growth and Income Fund returned -18.43% (Investor Class) and -18.31% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned -19.36% over the same period. For the fourth quarter of the year, the Fund returned 10.83% (Investor Class) and 10.89% (Institutional Class), while the benchmark returned 11.43%.
Market environment:
The last quarter of 2022 saw a regional rebound thanks mainly to China exiting its COVID restrictions. But Asian markets grappled with the COVID-related mobility restrictions for most of the year along with rising rates and inflation, geopolitical tensions and a weakening consumer. A cyclical correction in semiconductor inventories added to the headwinds for the technology-dependent markets of South Korea and Taiwan, which both fell over 20% in the year. China’s equity markets, with their own headwinds, fell almost 20%. Mobility restrictions impacted housing sales which, along with prior efforts to reduce leverage among property developers, prompted liquidity concerns for the sector. In Asia generally, higher global interest rates challenged lofty valuations for high-growth internet and electric vehicle (EV) stocks. The region also saw geopolitical tensions impact sentiment, particularly in China as the U.S. placed restrictions on its own exports of key technology to the country.
The second half of the year had more positives. Significant steps were made toward resolving the U.S.-China audit dispute concerning Chinese companies listed in the U.S., China eased up on regulation from online gaming to property development and the Chinese government took concrete steps to re-emerge from the pandemic. Indonesia and Singapore were among the few markets to post positive U.S. dollar-returns for 2022. Indonesia gained from rising commodity prices while Singapore benefited from reopening early in the year.
Performance Contributors and Detractors:
From a country perspective, the portfolio’s overweight and stock selection in Singapore was the biggest contributor to relative performance. Our overweight and stock selection in China/Hong Kong was also a top contributor. In contrast, our stock selection in India was the biggest detractor to performance.
At the sector level, stock selection in information technology, communication services and financials were the biggest contributors to performance during the year. Financials benefited as businesses exposed to rate rises did well while China’s recovery helped all three sectors. On the other hand, stock selection in consumer staples and consumer discretionary were the biggest detractors.
At the stock level, AIA Group was the top contributor to performance in 2022. Faced with the challenges posed by China’s zero-COVID policy, the company focused on rationalizing costs and also announced its first stock buyback since its initial public offering (IPO) in 2010. With the scrapping of zero COVID, the company’s agency business has recovered to pre-pandemic levels. United Overseas Bank in Singapore also performed well, underpinned by rising interest margins in tandem with U.S. rate hikes. The bank's technology investments reduced costs and there were no major asset quality issues. Yum China Holdings, operator of KFC and Pizza Hut brands in China, was a surprisingly strong performer. Management’s response to zero COVID was to share workers across locations that were open and expand digital sales. The company beat earnings expectations and its earnings multiple remained resilient. In contrast, Tencent Holdings was the biggest detractor as Internet stocks corrected globally as central banks rapidly hiked interest rates. Additional challenges included weak consumer and ad spending and a regulatory stay on game approvals. The start of new approvals and the easing of pandemic restrictions signal better days ahead. Another detractor was Taiwan Semiconductor Manufacturing Co. (TSMC) as demand for PCs and smartphones slowed in 2022. Geopolitical concerns between China, Taiwan and the U.S. also weighed on the stock. Thanks to China’s removal of its COVID policy and with it, improved market sentiment, both Tencent and TSMC were top performers in the fourth quarter. Another large detractor for the full year was CIFI Ever Sunshine Services Group, a property management service provider in Hong Kong. The government crack-down on leverage in the real estate market prompted concerns over the liquidity of developers, including Ever Sunshine’s parent company CIFI Holdings Group.
Notable Portfolio Changes:
The fund exited Topsports International, an athletic footwear and apparel retailer in China serving major global brands. Concerns remain over the long-term bargaining power of retailers as brands seek to go direct to consumers. Another exit in the consumer space was Coway, an appliance renter in South Korea. Slowing consumer demand in a saturated market with rising competition has impacted long-term prospects and the ability to execute meaningful dividend increases. Coway was replaced by SK Telecom. While SK Telecom operates in a low-growth market it offers a healthy yield of over 8% in addition to management’s commitment to sustain dividends going forward.
Outlook:
Following China’s 20th Party Congress in October we have seen a return to more pragmatic policies. The major issues of supporting the property sector through its ongoing liquidity challenges, easing regulatory conflicts, attempting to improve bilateral relations with other countries, and engaging in economic reopening, have all made progress. The most pivotal of these has been the removal of the zero-COVID policy, albeit the transition to normalcy has been challenging as infection rates rise and economic activity is likely to take some time to fully resume.
Looking ahead, all these issues will likely continue to drive asset values in Asia. Importantly, a low base should allow for a return to double-digit earnings growth for China this year if the renewed policy regime remains in place. While this is a constructive argument for emerging markets, expectations for Asia as a whole are for a more muted 5% growth given a possible recession in the U.S. and a technology cycle that has slowed. Meanwhile, valuations are a reasonable, although not especially cheap, 13x P/E. At a portfolio level, we continue to believe that this backdrop reinforces the importance of investing in quality companies that exhibit visible cash flow generation that is both sustainable and growing. When combined with a healthy income stream, it is our view that this can provide an attractive risk-adjusted return for our shareholders over a cycle.
Top 10 holdings as of December 31, 2022. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MACSX as of 12/31/2022
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
Yields as of 12/31/2022
The 30-Day SEC Yield represents net investment income earned by the Fund over the 30-day period ended 12/31/2022, 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.