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Matthews Pacific Tiger Fund

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

30/04/2010

Inception Date

7.23%

YTD Return (USD)

(as of 19/01/2021)

$26.85

Price (USD)

(as of 19/01/2021)

$468.20 million

Fund Assets

(as of 31/12/2020)

Objective

Seeks to achieve 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 equities of companies located in Asia, and may invest the remainder of its net assets in other permitted assets on a worldwide basis. For the purpose of this policy, Asia includes China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

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 and emerging market securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. 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.

The risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 30/04/2010
Fund Assets $468.20 million (31/12/2020)
Base Currency USD
ISIN: LU0491816475 (USD) LU0594555756 (GBP) LU0491816129 (EUR) LU1576347550 (JPY)
Bloomberg Symbol MATAPTI:LX (USD) MATAPGI:LX (GBP) MAPTFIE:LX (EUR) MPACTIJ:LX (JPY)
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 31/03/2020 1.12% ( USD ) 1.12% ( GBP ) 1.25% ( EUR ) 1.11% ( JPY )

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
    Returns
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As of 31/12/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund (USD)
9.87% 22.03% 30.48% 30.48% 9.01% 12.49% 7.92% 8.98% 30/04/2010
MSCI All Country Asia ex Japan Index (USD)
6.84% 18.66% 25.36% 25.36% 8.46% 13.90% 6.80% 7.85%
Matthews Pacific Tiger Fund (GBP)
7.10% 14.52% 25.96% 25.96% 8.61% 14.34% n.a. 10.88% 28/02/2011
MSCI All Country Asia ex Japan Index (GBP)
4.35% 12.23% 21.49% 21.49% 8.09% 15.63% n.a. 9.37%
Matthews Pacific Tiger Fund (JPY)
8.75% 18.95% 23.94% 23.94% 5.85% n.a. n.a. 11.66% 27/03/2017
MSCI All Country Asia ex Japan (JPY)
5.79% 16.09% 19.10% 19.10% 5.36% n.a. n.a. 11.23%
Matthews Pacific Tiger Fund (EUR)
7.17% 16.33% 19.40% 19.40% n.a. n.a. n.a. 12.93% 30/04/2019
MSCI All Country Asia ex Japan Index (EUR)
4.45% 13.73% 15.01% 15.01% n.a. n.a. n.a. 11.44%
As of 31/12/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Pacific Tiger Fund (USD)
9.87% 22.03% 30.48% 30.48% 9.01% 12.49% 7.92% 8.98% 30/04/2010
MSCI All Country Asia ex Japan Index (USD)
6.84% 18.66% 25.36% 25.36% 8.46% 13.90% 6.80% 7.85%
Matthews Pacific Tiger Fund (GBP)
7.10% 14.52% 25.96% 25.96% 8.61% 14.34% n.a. 10.88% 28/02/2011
MSCI All Country Asia ex Japan Index (GBP)
4.35% 12.23% 21.49% 21.49% 8.09% 15.63% n.a. 9.37%
Matthews Pacific Tiger Fund (JPY)
8.75% 18.95% 23.94% 23.94% 5.85% n.a. n.a. 11.66% 27/03/2017
MSCI All Country Asia ex Japan (JPY)
5.79% 16.09% 19.10% 19.10% 5.36% n.a. n.a. 11.23%
Matthews Pacific Tiger Fund (EUR)
7.17% 16.33% 19.40% 19.40% n.a. n.a. n.a. 12.93% 30/04/2019
MSCI All Country Asia ex Japan Index (EUR)
4.45% 13.73% 15.01% 15.01% n.a. n.a. n.a. 11.44%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews Pacific Tiger Fund (USD)
30.48% 11.18% -10.71% 39.47% -0.29% -1.91% 11.22% 4.86% 18.65% -12.40%
MSCI All Country Asia ex Japan Index (USD)
25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11% 3.34% 22.70% -17.07%
Matthews Pacific Tiger Fund (GBP)
25.96% 7.87% -5.71% 27.14% 19.96% 3.14% 18.00% 2.56% 13.54% n.a.
MSCI All Country Asia ex Japan Index (GBP)
21.49% 13.94% -8.78% 29.78% 26.15% -3.63% 11.65% 1.42% 17.31% n.a.
Matthews Pacific Tiger Fund (JPY)
23.94% 9.79% -12.83% n.a. n.a. n.a. n.a. n.a. n.a. n.a.
MSCI All Country Asia ex Japan (JPY)
19.10% 17.39% -16.36% n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Matthews Pacific Tiger Fund (EUR)
19.40% n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
MSCI All Country Asia ex Japan Index (EUR)
15.01% n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
For the period ended 31/12/2020
Name 2020 2019 2018 2017 2016 Inception Date
Matthews Pacific Tiger Fund (USD)
30.48% 11.18% -10.71% 39.47% -0.29% 30/04/2010
MSCI All Country Asia ex Japan Index (USD)
25.36% 18.52% -14.12% 42.08% 5.76%
Matthews Pacific Tiger Fund (GBP)
25.96% 7.87% -5.71% 27.14% 19.96% 28/02/2011
MSCI All Country Asia ex Japan Index (GBP)
21.49% 13.94% -8.78% 29.78% 26.15%
Matthews Pacific Tiger Fund (JPY)
23.94% 9.79% -12.83% n.a. n.a. 27/03/2017
MSCI All Country Asia ex Japan (JPY)
19.10% 17.39% -16.36% n.a. n.a.
Matthews Pacific Tiger Fund (EUR)
19.40% n.a. n.a. n.a. n.a. 30/04/2019
MSCI All Country Asia ex Japan Index (EUR)
15.01% n.a. n.a. n.a. n.a.

Source: Brown Brothers Harriman (Luxembourg) S.C.A.

Since inception performance for share classes with less than one year of history represents actual performance, not annualised. In addition, for share classes less than a year old, Year to Date Return is calculated since inception. Where no past performance is shown there was insufficient data available in that year to provide performance.

Performance details provided are based on a NAV-to-NAV basis with any dividends reinvested, and are net of management fees and other expenses. Performance data has been calculated in the respective currencies stated above, including ongoing charges and excluding subscription fee and redemption fee you might have to pay.

All performance quoted represents past performance and is not indicative of future performance. Investors may not get back the full amount invested. 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.

Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.

Portfolio Characteristics

(as of 31/12/2020)
64
Number of Securities

Source: Brown Brothers Harriman (Luxembourg) S.C.A

30.2x
P/E using FY1 estimates
24.2x
P/E using FY2 estimates
$165.9 billion
Weighted Average Market Cap

Source: FactSet Research Systems

Top 10 Holdings

(as of 31/12/2020)
Name Sector Country % Net Assets
Samsung Electronics Co., Ltd. Information Technology South Korea 6.6
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 6.0
Tencent Holdings, Ltd. Communication Services China/Hong Kong 6.0
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 5.0
AIA Group, Ltd. Financials China/Hong Kong 4.1
Hong Kong Exchanges & Clearing, Ltd. Financials China/Hong Kong 3.3
China Resources Beer Holdings Co., Ltd. Consumer Staples China/Hong Kong 2.4
LG Chem Ltd. Materials South Korea 2.4
Wuxi Biologics Cayman, Inc. Health Care China/Hong Kong 2.4
ENN Energy Holdings, Ltd. Utilities China/Hong Kong 2.4
TOTAL 40.6

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 31/12/2020)
  • Sector Allocation
  • Country Allocation
  • Asset Type Breakdown
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 29.3 23.1 6.2
Consumer Discretionary 18.2 19.1 -0.9
Financials 14.9 17.9 -3.0
Consumer Staples 11.9 5.0 6.9
Communication Services 11.0 11.5 -0.5
Real Estate 6.5 3.9 2.6
Health Care 6.4 5.0 1.4
Utilities 4.8 2.2 2.6
Materials 3.2 4.3 -1.1
Industrials 2.8 5.3 -2.5
Energy 0.0 2.8 -2.8
Liabilities in Excess of Cash and Other Assets -8.9 0.0 -8.9

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 52.3 51.6 0.7
South Korea 15.7 15.2 0.5
Taiwan 15.6 14.2 1.4
India 13.3 10.4 2.9
Indonesia 3.2 1.5 1.7
Singapore 2.7 2.4 0.3
Philippines 2.0 0.8 1.2
Thailand 1.8 2.1 -0.3
Vietnam 1.2 0.0 1.2
Malaysia 1.1 1.7 -0.6
Liabilities in Excess of Cash and Other Assets -8.9 0.0 -8.9

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

Asset Type Fund
Common Equities and ADRs 109.0
Liabilities in Excess of Cash and Other Assets -8.9
Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 64.9 64.0 0.9
Large Cap ($10B-$25B) 20.1 19.7 0.4
Mid Cap ($3B-$10B) 19.5 14.9 4.6
Small Cap (under $3B) 4.4 1.5 2.9
Liabilities in Excess of Cash and Other Assets -8.9 0.0 -8.9

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.

Ratings

  • OVERALL
  • 3 YEAR
  • 5 YEAR
  • 10 YEAR
(as of 20/07/2020)

Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.

Overall Morningstar RatingTM is reflective of the USD Accumulation Share class. Fund ratings represent an opinion only and are not a recommendation to buy or sell any fund. Copyright ©2020 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is provided for reference purposes only.

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.

Portfolio Managers

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Lead Manager

Raymond Z. Deng photo
Raymond Z. Deng

Co-Manager

Inbok  Song photo
Inbok Song

Co-Manager

Commentary

Period ended 30 September 2020

For the quarter ending 30 September 2020, the Matthews Pacific Tiger Fund returned 13.00%, while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.79%.

Market Environment:

Asia ex-Japan equities continued their upward trajectory in third quarter, led by gains in the larger markets across the region. Many Asian currencies and equities rallied as economic activity slowly resumed, with earlier pandemic-related lockdowns easing. With an eye toward mitigating the health care and economic impacts of the pandemic, North Asia countries have generally been more successful, coordinated and effective in their public health response. South and Southeast Asia have had a relatively tougher time combatting the virus with intermittent imposition of localized lockdowns. 

Notably, the trend towards a broad-based recovery in equity gains that started in the second quarter persisted in the third quarter, with most sectors appreciating, except banks and utilities. Consumer discretionary was the best performing sector in the region partly helped by a sharp recovery in autos. Valuations for automakers had become inexpensive, and investors are looking at the recovery in volumes, especially in China, as a potential driver of future earnings.

For the second quarter in a row, small caps outperformed large caps suggesting that investors are anticipating broader improvement in economic activity. As if on cue, interest rates across some of the major economies like China and India rose further in the third quarter, perhaps on the back of continued issuances of government bonds and a recovery in growth. The uptick in interest rates in China and India is a contrast to many other parts of the world. For global equity investors, exposure to Asia provided meaningful diversification in the quarter through access to more varied return drivers, including positive local interest rates and rising domestic consumption.

Performance Contributors and Detractors:

Stock selection in China was a contributor to performance in the quarter. Among individual stocks, Chinese domestic A shares companies Inner Mongolia Yili Industrial Group Co. and China Resources Beer were both contributors. China’s largest dairy producer, Inner Mongolia Yili Industrial Group Co enjoyed stock price gains on growing expectations that the consumer’s preference for quality dairy products and healthier lifestyles will likely be a growth driver for Yili. Meanwhile, China Resources Beer has also gained market share in a consolidating marketplace, while employing a very nimble approach to operations during the pandemic. By keeping inventory low, the company has been able to increase its prices, and employ more competitive marketing practices.

On the other hand, stock selection in India was a detractor in the quarter. We continue to see weakness among Indian financials, including Kotak Mahindra Bank Limited of India. India’s banking and financial system in India continues to wrestle with the economic impacts of the coronavirus. In addition, continued changes by the central bank in India regarding rules for recognizing and restructuring bad loans has weighed on the sector. At the same time, we believe there may be long-term growth in the sector. Our approach continues to be maintaining exposure to banks with strong balance sheets in order to capture a potential turnaround in the sector.

Notable Portfolio Changes:

During the quarter, we initiated a new position in LG Chem, a South Korean EV battery maker and chemical manufacturer. As a leading supplier of EV batteries, LG Chem is benefiting from the growth of the overall EV industry, for which batteries are one of the largest associated costs. LG Chem produces batteries at scale, enabling the company to serve a large, addressable global market. The company’s customer base and revenue sources are well diversified, including significant market share within high-growth European EV markets. LG Chem also has attractive, positive capacity to build up other business lines, providing additional drivers of growth.

We also rotated capital in the quarter, trimming some positions among higher valuation stocks and adding to high-quality positions that represented better relative value in our view. For instance, we have initiated new positions in businesses where we see the opportunities from augmentation of industrial/technology supply chain (Singapore), and, prospect of recovery in consumption related activities as the threat from COVID recedes (India).

Outlook:

Stepping back from some of the near-term issues in the region, we are encouraged by the progress of economic reforms in Asia. Amid the pandemic, many of Asia’s policymakers have accelerated efforts toward further opening capital markets to foreign investments, as well as toward reforming labor laws, giving employers greater flexibility in managing their workforces. While the nature of reforms varies among countries in different stages of economic development, the overall trend is unifying and positive for Asia’s capital markets.

Chinese policymakers have been focused on developing the country’s capital markets as an alternate channel of financing, and the latest efforts are an endeavor to attract inflows from foreign investors by further simplifying access to its domestic market (A-shares) as well as to enhance liquidity and risk management for domestic entities.  For instance, the continued progress on the registration-based IPO mechanism aims to provide greater access to equity capital for entrepreneurs and small- and medium-sized businesses. These are helpful and timely developments, as we also see a partial augmentation of the listings of Chinese companies as ADRs on the New York Stock Exchange seeking a secondary listing in Hong Kong or even in mainland China.

In India, the nature of the reforms is somewhat different but could be equally impactful. India’s parliament has recently passed some measures that look to simplify and consolidate the plethora of the country’s labor laws , reducing employers’ burden of recruiting employees and easing regulatory compliance. Elsewhere in the region, we’ve seen a new omnibus law in Indonesia that includes reforms to existing labor laws and the launch of a sovereign wealth fund to help institutionalize Indonesia’s investor base, both of which will have positive long-term reverberations for the country’s economy and equity market.

These economic reforms, combined with rising household incomes and growing domestic consumption, make Asia an attractive destination in our view for long-term equity investors. In terms of our portfolio, our approach remains premised on the idea of looking for sustainable growth, particularly in businesses that are domestically oriented. We also tend to favor companies that have greater ballast on their balance sheet and able to survive the pandemic-related economic turmoil better than others. As such, we believe a revival in economic activity across the region should benefit our portfolio holdings.

Rolling 12 Month Returns For the period ended 31/12/2020 - I (Acc)
Name 2020 2019 2018 2017 2016 Inception Date
Matthews Pacific Tiger Fund (USD)
30.48% 11.18% -10.71% 39.47% -0.29% 30/04/2010
MSCI All Country Asia ex Japan Index (USD)
25.36% 18.52% -14.12% 42.08% 5.76%
Matthews Pacific Tiger Fund (GBP)
25.96% 7.87% -5.71% 27.14% 19.96% 28/02/2011
MSCI All Country Asia ex Japan Index (GBP)
21.49% 13.94% -8.78% 29.78% 26.15%
Matthews Pacific Tiger Fund (JPY)
23.94% 9.79% -12.83% N.A. N.A. 27/03/2017
MSCI All Country Asia ex Japan (JPY)
19.10% 17.39% -16.36% N.A. N.A.
Matthews Pacific Tiger Fund (EUR)
19.40% N.A. N.A. N.A. N.A. 30/04/2019
MSCI All Country Asia ex Japan Index (EUR)
15.01% N.A. N.A. N.A. N.A.

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg

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. 

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