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
A focus on Asia—and providing compelling investment solutions for our clients—is what we believe distinguishes us among investment managers. Our insights into investment opportunities and risks are backed by proprietary research, a collaborative culture and nearly 30 years of experience.
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)
Seeks to achieve long term capital appreciation.
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.
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.
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 |
Management Fee | 0.75% | |
Total Expense Ratio As of 31/03/2020 | 1.12% ( USD ) 1.12% ( GBP ) 1.25% ( EUR ) 1.11% ( JPY ) |
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.
Source: Brown Brothers Harriman (Luxembourg) S.C.A
Source: FactSet Research Systems
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
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.
Lead Manager
Portfolio Manager
Sharat Shroff is a Portfolio Manager at Matthews Asia and manages the firm's Pacific Tiger Strategy and co-manages the India Strategy. Prior to joining the firm in 2005 as a Research Analyst, Sharat worked in the San Francisco and Hong Kong offices of Morgan Stanley as an Equity Research Associate. Sharat received a Bachelor of Technology from the Institute of Technology in Varanasi, India and an MBA from the Indian Institute of Management, in Calcutta, India. He is fluent in Hindi and Bengali.
Co-Manager
Portfolio Manager
Raymond Deng is a Portfolio Manager at Matthews Asia, and co-manages the firm's Pacific Tiger and Asia Innovators Strategies. Prior to joining the firm in 2014, Raymond earned an M.B.A from The University of Chicago Booth School of Business. From 2008 to 2012, he worked at Booz & Company, most recently as a Senior Consultant responsible for developing corporate growth strategies, financial analysis and modeling and client management. Raymond received a B.S. in Industrial Engineering from Tsinghua University in Beijing. He is fluent in Mandarin.
Co-Manager
Portfolio Manager
Inbok Song is a Portfolio Manager at Matthews Asia and co-manages the firm's Pacific Tiger Strategy. Prior to rejoining the firm in 2019, Inbok spent three years at Seafarer Capital Partners as a portfolio manager, the firm's Director of Research and chief data scientist. Previously she was at Thornburg Investment Management as an associate portfolio manager. From 2007 to 2015, she was at Matthews Asia, most recently as a portfolio manager. From 2005 to 2006, Inbok served as an Analyst and Technology Specialist at T. Stone Corp., a private equity firm in Seoul, South Korea. From 2004 to 2005, she was a research engineer for Samsung SDI in Seoul. Inbok received both a B.A. and Masters in Materials Science and Engineering from Seoul National University. She received a Masters in International Management from the University of London, King's College, and also an M.A. in Management Science and Engineering, with a concentration in finance from Stanford University. Inbok is fluent in Korean.
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 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)
Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg