- High-conviction, concentrated equity portfolio of innovative companies in Asia ex Japan
- All-cap fundamental approach focused on companies with unique offerings that create or expand markets
- Capitalizing on the new economy and the rising disposable income in Asia
23/03/2021
Inception Date
n.a.
YTD Return (USD)
(as of 24/01/2022)
$8.16
Price (USD)
(as of 24/01/2022)
$43.50 million
Fund Assets
(as of 31/12/2021)
Objective
Long-term capital appreciation
Strategy
The Fund seeks to achieve its investment objective by investing, directly or indirectly, at least 65% of its total net assets in companies Asia ex Japan that Matthews Asia believes are capable of growth based on innovation, which could be innovation in products or services or in other areas, such as processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets.
Risks
The value of an investment in the Fund can go down as well as up and possible loss of principal is a risk of investing. Investments in international, emerging and frontier market securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation, which may adversely affect the value of the Fund's assets. The Fund invests in holdings denominated in foreign currencies, and is exposed to the risk that the value of the foreign currency will increase or decrease. The Fund invests primarily in equity securities, which may result in increased volatility.
These and other risks associated with investing in the Fund can be found in the prospectus.
Fund Facts
| Inception Date | 23/03/2021 | |
| Fund Assets | $43.50 million (31/12/2021) | |
| Base Currency | USD | |
| ISIN: | LU2298459939 (USD) LU2298460192 (GBP) | |
| Bloomberg Symbol | MAIGIUA:LX (USD) MAIGIAG:LX (GBP) | |
| Benchmark | MSCI All Country Asia ex Japan Index | |
| Geographic Focus | Asia Ex Japan: Consists of all countries and markets in Asia, excluding Japan but including all developed, emerging and frontier countries and markets in Asia | |
Fees & Expenses
| Management Fee | 0.75% | |
| Total Expense Ratio As of 30/09/2021 | 0.90% ( USD ) 0.90% ( GBP ) | |
Performance
- Monthly
- Quarterly
As of 31/12/2021
As of 31/12/2021
Performance information for Funds and/or share classes will not be shown until they have at least a one year track record.
Strategy Performance
- Quarterly
- Rolling Returns
As of 31/12/2021
As of 31/12/2021
1 Month3 MonthsYTD1 Year3 Year5 Year10 YearSince Inception
For the years ended Dec 31th
An investment in Matthews Asia Funds is subject to risks. The performance information above is for a representative portfolio in the Matthews Asia Innovators strategy, based on the largest AUM managed by Matthews International Capital Management, LLC. This performance information does not, and it is not intended to, represent performance of the Matthews Asia Innovative Growth Fund, which commenced operations on 23 March 2021. The performance information of the representative portfolio is shown for the purpose of indicating a longer past track record and for reference only. While the Matthews Asia Innovative Growth Fund is managed in a substantially similar manner as the Matthews Asia Innovators strategy, performance results for the Matthews Innovative Growth Fund may vary from the representative portfolio for the Matthews Asia Innovators strategy. All performance is in US$ and includes all dividends and interest accrued income, realized and unrealized gains or losses, accrued expenses, and are net of all brokerage commissions and execution costs and advisory and other fees. Individual account performance will vary.
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 the original cost. Current performance may be lower or higher than performance shown. Investors investing in Funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal.
Index since inception value calculated from 31/12/1999.
Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.
Portfolio Characteristics
(as of 31/12/2021)Sources: Factset Research Systems, Inc.
Top 10 Holdings
(as of 31/12/2021)Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.
Source: Brown Brothers Harriman (Luxembourg) S.C.A
Portfolio Breakdown (%)
(as of 31/12/2021)- Sector Allocation
- Country Allocation
- Market Cap Exposure
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 unless otherwise noted.
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.
Portfolio Manager
Michael J. Oh, CFA
Portfolio Manager
Michael J. Oh, CFA
Portfolio Manager
Michael Oh is a Portfolio Manager at Matthews Asia. He manages the firm's Asia Innovators and Korea Strategies and co-manages the Asia Growth Strategy. Michael joined Matthews Asia in 2000 as a Research Analyst and has built his investment career at the firm. Michael was promoted from Research Analyst to Assistant Portfolio Manager in 2003. In 2006 and 2007, he was promoted to Lead Manager of the Matthews Asia Innovators Strategy and the Matthews Korea Strategy, respectively. From 2000-2003, Michael's research focused on the technology sector supporting multiple strategies managed by the founders of the firm. As a research analyst, he contributed investment ideas to the broader Matthews Asia investment teams. Michael received a B.A. in Political Economy of Industrial Societies from the University of California, Berkeley. He is fluent in Korean.
Related Research & Insights
Performance figures discussed in the Fund Manager Commentary above reflect that of the Institutional Accumulation Class Shares and has been calculated in USD. Performance details provided for the Fund are based on a NAV-to-NAV basis, with any dividends reinvested, and are net of management fees and other expenses. Past performance information is not indicative of future performance. Investors may not get back the full amount invested.
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. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.
Information contained herein is sourced from Matthews Asia unless otherwise stated. The views and opinions in this commentary were as of the report date, subject to change and may not reflect the writer’s 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.
Investors should not invest in the Fund solely based on the information in this material alone. Please refer to the Prospectus for further details of the risk factors.
The Markit iBoxx Asian Local Bond Index tracks the total return performance of a bond portfolio consisting of local-currency denominated, high quality and liquid bonds in Asia ex-Japan. The Markit iBoxx Asian Local Bond Index includes bonds from the following countries: China (on- and offshore markets), Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.
The J.P. Morgan Asia Credit Index (JACI) tracks the total return performance of the Asia fixed-rate dollar bond market. JACI is a market cap-weighted index comprising sovereign, quasi-sovereign and corporate bonds and is partitioned by country, sector and credit rating. JACI includes bonds from the following countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand.
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 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 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).
Commentary
Period ended 30 September 2021
For the quarter ending 30 September 2021, the Matthews Asia Innovative Growth Fund returned -11.49%, while its benchmark, the MSCI All Country Asia ex Japan Index, returned -9.23% over the same period.
Market Environment:
The new regulatory policies around China’s Internet sector dominated headlines in Asia as the Chinese government continued to release their guidelines on consumer data protection, workers’ rights and online gaming restrictions on minors during the quarter. The China Evergrande Group default risk and recent power outage incidents further dented investors’ sentiments during the quarter. While we expect new regulatory policies to create short-term volatilities in the market and disruptions in operating environments in various verticals in China’s Internet industry, we believe that these policies are aimed at improving long-term sustainability of the markets and to foster more innovation in the industry. Most policies that have been announced so far have been targeted at providing fair competition among market participants, protecting workers rights and restricting minors’ time spent online. These should all benefit healthy development of consumer markets in China and should eventually benefit companies that participate in these industries over the long term. In our view, internet companies continue to be some of the most innovative companies in the region and remain as one of the best positioned industries to benefit from rising disposable income in the region. While we believe that the regulatory environment concerns in China might persist longer, the valuation of Chinese Internet companies currently looks very attractive.
Performance Contributors and Detractors:
On a country basis, India performed the best while China continued to detract from performance during the third quarter. While we expect concerns around Chinese regulatory risks to persist in the near term, we are seeing some valuation support at current stock price levels as many companies are now trading near their historical lows. India has been the bright spot as the number of COVID-19 cases continued to trend down during the quarter. We continue to see attractive prospects in India, and are encouraged to be seeing more unicorns (private companies valued at or over US$1 billion) coming to the market.
On a company basis, Sea Ltd., a consumer internet company based in Singapore, was the largest contributor to relative performance during the quarter. Sea continued to execute well within both e-commerce and online gaming, and has been relatively safe from regulatory risks compared with internet companies in China. Bajaj Finance was also a strong contributor to performance as the company has emerged as one of the potential leaders in the fintech industry in India.
Our holdings in China mostly underperformed during the quarter, as concerns over regulatory risks persisted and the latest incidents of power outages also further dampened investor sentiment. Meituan Dianping, China’s largest food delivery service, and Bilibili Inc., one of China’s leading internet entertainment platforms, were among the bottom performers. We continue to hold both companies and added to both positions during the quarter, as the fundamentals of these companies remained healthy and their position as dominant players in their respective fields have strengthened as a result of more regulatory scrutiny.
Notable Portfolio Changes:
During the quarter, we consolidated our positions in China, reducing the total number of holdings while increasing the weightings in higher-conviction names. We sold out of Yatsen Holding Limited, a cosmetics company in China. The cosmetics market in China continues to be very competitive and the growth of Yatsen has been lower than expected. We bought back Chinese agriculture-focused technology platform firm Pinduoduo, as the share price corrected meaningfully during the quarter. Pinduoduo has reported their first profit during the quarter and their user engagement continued to improve strongly. We also added Crompton Greaves, one of the most innovative players in India’s consumer electronics industry in our view and we expect the company to continue to expand their product categories.
Outlook:
The concerns over China’s regulatory environment may cause more volatility in the region. We continue to monitor the situation very closely, making necessary changes as new policies are announced. The valuation of Chinese internet companies looks very attractive currently despite these risks and we will continue to build positions in companies that we believe are well positioned to grow and benefit from consumption growth.
Despite difficult challenges in China, we are excited to see significant developments in countries like India, South Korea, Indonesia and other Southeast Asian countries as well. We continue to find many innovative companies in Asia at appealing levels today and the current levels continue to provide fertile hunting ground for companies that are innovating in areas such as business strategy, products and services, marketing and human capital.
Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg