TOP

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

-1.80%

YTD Return

(as of 09/22/2023)

$12.12

NAV

(as of 09/22/2023)

+0.14

1 Day NAV Change

(as of 09/22/2023)

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 $476.04 million (08/31/2023)
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
Fees & Expenses
Gross Expense Ratio 1.13%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • data_graph_selected Created with Sketch.
  • bar_graph_selected Created with Sketch.
As of 08/31/2023
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
-6.36% -1.66% 0.23% -1.19% -2.16% 1.07% 2.02% 7.59%
MSCI All Country Asia ex Japan Index
-6.39% 2.21% 2.59% -0.24% -2.60% 1.15% 4.70% 4.05%
As of 06/30/2023
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
2.47% -1.25% 4.44% 0.16% 2.04% 1.93% 2.22% 7.79%
MSCI All Country Asia ex Japan Index
2.81% -1.14% 3.19% -0.76% 1.49% 1.25% 4.80% 4.09%
For the years ended December 31st
Name 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Matthews Asian Growth and Income Fund - MACSX
MACSX
-18.43% 0.04% 16.00% 17.26% -10.96% 21.85% 1.34% -4.50% -0.65% 4.83%
MSCI All Country Asia ex Japan Index
-19.36% -4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34%

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 06/30/2023)

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.

Yield

(as of 06/30/2023)
2.55% 30-Day SEC Yield
2.55% 30-Day SEC Yield (excluding expense waiver)
3.29% 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 48 funds
  • 3 YEAR
  • out of 48 funds
  • 5 YEAR
  • out of 46 funds
  • 10 YEAR
  • out of 33 funds
  • 1 YEAR
  • 2nd
  • 12 out of 38 funds
  • 3 YEAR
  • 2nd
  • 13 out of 37 funds
  • 5 YEAR
  • 2nd
  • 12 out of 36 funds
  • 10 YEAR
  • 4th
  • 24 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 06/30/2023)
Fund Benchmark
Number of Positions 47 1,229
Weighted Average Market Cap $111.9 billion $115.7 billion
Active Share 76.6 n.a.
Price/Cash Flow 9.7 7.0
Price/Book 2.0 1.6
Return On Equity 18.8 15.1
EPS Growth (3 Yr) 7.5% 18.2%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 06/30/2023)
0.45%
Alpha
0.88
Beta
81.57%
Upside Capture
84.99%
Downside Capture
0.04
Sharpe Ratio
0.11
Information Ratio
4.94%
Tracking Error
93.90

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 08/31/2023)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 7.6
AIA Group, Ltd. Financials China/Hong Kong 4.5
Tencent Holdings, Ltd. Communication Services China/Hong Kong 4.4
HDFC Bank, Ltd. Financials India 3.8
Samsung Electronics Co., Ltd. Information Technology South Korea 3.5
ESR Group, Ltd., Cnv., 1.500%, 09/30/2025 Real Estate China/Hong Kong 2.7
PT Bank Rakyat Indonesia Persero Tbk Financials Indonesia 2.6
Macquarie Korea Infrastructure Fund Financials South Korea 2.5
Pharmaron Beijing Co., Ltd., Cnv., 0.000%, 06/18/2026 Health Care China/Hong Kong 2.3
Midea Group Co., Ltd. Consumer Discretionary China/Hong Kong 2.3
TOTAL 36.2

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 06/30/2023)
  • Sector Allocation
  • Country Allocation
  • Asset Type Breakdown
  • Market Cap Exposure
Sector Fund Benchmark Difference
Financials 20.5 20.9 -0.4
Information Technology 20.1 24.2 -4.1
Communication Services 12.2 9.7 2.5
Industrials 11.9 7.2 4.7
Consumer Discretionary 11.4 14.2 -2.8
Real Estate 7.2 3.4 3.8
Consumer Staples 5.6 5.2 0.4
Health Care 5.2 3.8 1.4
Utilities 2.9 2.5 0.4
Materials 0.0 5.2 -5.2
Energy 0.0 3.7 -3.7
Cash and Other Assets, Less Liabilities 3.1 0.0 3.1

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 46.8 40.5 6.3
Taiwan 11.5 17.8 -6.3
India 10.2 16.8 -6.6
South Korea 9.3 14.1 -4.8
Singapore 7.1 3.8 3.3
France 3.0 0.0 3.0
Indonesia 2.3 2.3 0.0
Philippines 1.8 0.7 1.1
Thailand 1.7 2.2 -0.5
United States 1.6 0.0 1.6
Australia 1.5 0.0 1.5
Malaysia 0.0 1.5 -1.5
Macau 0.0 0.2 -0.2
Cash and Other Assets, Less Liabilities 3.1 0.0 3.1

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

Asset Type Fund
Common Equities and ADRs 88.9
Convertible Bonds 8.1
Cash and Other Assets, Less Liabilities 3.1
Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 48.8 58.4 -9.6
Large Cap ($10B-$25B) 14.0 21.3 -7.3
Mid Cap ($3B-$10B) 26.9 18.5 8.4
Small Cap (under $3B) 7.3 1.8 5.5
Cash and Other Assets, Less Liabilities 3.1 0.0 3.1

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)
06/27/2023 06/28/2023 $0.16500 $0.00000 $0.00000 $0.16500 1.3% N.A.
12/13/2022 12/14/2022 $0.13141 $0.00000 $0.41241 $0.54382 4.1% N.A.
06/27/2022 06/28/2022 $0.07829 $0.00000 $0.00000 $0.07829 0.6% 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, 2023

For the first half of 2023, the Matthews Asian Growth and Income Fund returned 4.44% (Investor Class) and 4.43% (Institutional Class), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 3.19% over the same period. For the quarter ending June 30, 2023, the Fund returned -1.25% (Investor Class) and -1.27% (Institutional Class), while the benchmark returned -1.14%.

Market Environment:

2023 began with a continuation of the rally in Asian markets but a rally that quickly petered out. For the rest of the six months up to mid-year, the MSCI AC Asia ex Japan Index, the portfolio’s benchmark, struggled. Much of the region’s relatively soft performance has focused on China where issues such as the continued U.S.-China political tensions and arguably underwhelming macroeconomic data have weighed on sentiment. It’s perhaps the market’s own disappointment at the pace of the recovery in China’s domestic demand that has contributed the most to lackluster returns. The government’s reluctance to aggressively stimulate the economy has further disappointed some.

The best performing countries over the period were Taiwan and South Korea, helped by both geographies having large information technology (IT) weights within their markets. IT was the strongest performing sector during the period helped by expectations of inventories clearing as well as the long-term potential presented by artificial intelligence (AI).

Performance Contributors and Detractors:

At the country level, the portfolio’s stock selection in China and Hong Kong was the top contributor to relative performance over the past six months amid gains in gaming stocks, select energy/power related companies and convertible bonds. Our overweight to U.S. and French companies with business activities in the region and our selections in Indonesia and the Philippines were also positive contributors. Indonesia has achieved much more monetary stability recently and this may have been beneficial for the financial sector.

Conversely, the portfolio’s underweight and stock selection in South Korea was the biggest detractor. Our underweight in Taiwan also detracted. In India, both stock selection and an underweight to what we deem to be an expensive market hurt relative performance.

From a sector perspective, stock selection in utilities and financials were among the top contributors to relative performance while both an underweight and stock selection in consumer discretionary also helped. In contrast, the biggest relative detractors included our slight underweight in IT and our overweight in real estate although this was almost entirely offset by good stock selection.

At the individual holdings level, the overall impact of the technology sector was significantly positive on an absolute basis because of our holdings in global industry leaders like Samsung, Advantech, TSMC and particularly Broadcom, recently buoyed by AI optimism. Bank Rakyat Indonesia was also a top performer in the period on the back of solid loan growth and stable margins and asset quality. Online gaming stocks, such as Tencent, and in particular NetEase, were also strong performers. China-based NetEase saw solid earnings delivery, a robust game pipeline and an aim to continue to grow its overseas business, all of which may have helped the stock.

In contrast, our exposure to JD.com, a direct competitor of Alibaba, was the biggest detractor to relative performance at the holdings level. Despite reasonable earnings delivery, the stock faltered as concerns remained around the competitive intensity of the industry as well as the strength of consumption in China. Fellow Chinese consumer stock Zhongsheng Group also fell. The auto dealer was impacted by weak sentiment and uncertainty over new car margins. Chinese health-care company Haier Biomedical also detracted from returns, as did Hong Kong-based life insurer AIA Group and Link REIT.

Notable Portfolio Changes:

There was fairly limited activity in the portfolio during the quarter. We exited drug manufacturer Sanofi India as profitability may be structurally impacted with the inclusion of the company's biggest diabetes treatment brand in the price-controlled National List of Essential Medicines. Combined with limited product launches and reasonably tepid performance from existing brands, we see better opportunities elsewhere.

Outlook:

Fears of a global recession, geopolitics and an uneven recovery in China continue to weigh on earnings growth expectations and sentiment for some of the region. The markets await clarity from the government in China on how it can increase consumer confidence and stimulate private investment. However, this uncertainty may be being priced in as the MSCI China Index trades at a fairly low multiple of 9x P/E. Further, it should be remembered that a lack of inflationary pressure in China allows room for some policy easing. Elsewhere, countries like India and Indonesia continue to see healthy consumer demand while the former can benefit from the relocation of supply chains and benign inflation. At a portfolio level, we continue to prefer investing in companies that we believe can strike a balance for the portfolio between shareholder returns and sustainable growth, aiming to deliver solid total returns through the economic cycle. This is a strategy that we believe is reasonably placed against what is an uncertain macroeconomic backdrop.

Top 10 holdings as of June 30, 2023. Current and future holdings are subject to change and risk.

 

Average Annual Total Returns - MACSX as of 06/30/2023
1YR 3YR 5YR 10YR Since Inception Inception Date
0.16% 2.04% 1.93% 2.22% 7.79% 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 06/30/2023
30-Day SEC Yield 2.55%
30-Day SEC Yield (excluding expense waiver) 2.55%
Dividend Yield 3.29%

The 30-Day SEC Yield represents net investment income earned by the Fund over the 30-day period ended 06/30/2023, 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.