Asia Fixed Income

Matthews Asia Credit Opportunities Fund

  • Bottom-up Asia credit strategy, with a focus on risk-adjusted returns
  • Invest primarily in USD-denominated high yield Asian bonds
  • Flexibility to invest across the spectrum of credit quality and issuers’ capital structure


Inception Date


YTD Return (USD)

(as of 14/04/2021)


Price (USD)

(as of 14/04/2021)

$22.17 million

Fund Assets

(as of 31/03/2021)


Total return over the long term.


Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 65% of its net assets in income-producing securities including, but not limited to, debt and debt-related instruments and derivative instruments with fixed income characteristics, issued by governments, quasi-governmental entities, supra-national institutions and companies in Asia. On an ancillary basis, the Fund may invest in dividend-paying equity securities of the foregoing issuers. Investments may be denominated in any currency, and may represent any part of a company’s capital structure from debt to equity or with features of both.


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. Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflation risks. The Fund may invest in the following: derivatives which can be volatile and affect Fund performance; high yield bonds (junk bonds) which can subject the Fund to substantial risk of loss; and structured investments which can change the risk or return, or replicate the risk or return of an underlying asset. 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 risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 30/09/2015
Fund Assets $22.17 million (31/03/2021)
Base Currency USD
ISIN: LU1275263116 (USD) LU1275263389 (GBP)
Benchmark J.P. Morgan Asia Credit 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
Management Fee 0.65%
Total Expense Ratio As of 31/03/2020 1.25% ( USD ) 1.25% ( GBP )


  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
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As of 31/03/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Credit Opportunities Fund (USD)
-2.23% -2.76% -2.76% 13.45% 2.14% 4.39% n.a. 5.03% 30/09/2015
J.P. Morgan Asia Credit Index (USD)
-0.39% -1.17% -1.17% 9.00% 5.59% 4.65% n.a. 5.13%
Matthews Asia Credit Opportunities Fund (GBP)
-1.07% -3.56% -3.56% 1.79% 2.88% 5.31% n.a. 6.90% 30/09/2015
J.P. Morgan Asia Credit Index (GBP)
0.94% -2.09% -2.09% -2.04% 6.17% 5.51% n.a. 6.93%
As of 31/03/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Credit Opportunities Fund (USD)
-2.23% -2.76% -2.76% 13.45% 2.14% 4.39% n.a. 5.03% 30/09/2015
J.P. Morgan Asia Credit Index (USD)
-0.39% -1.17% -1.17% 9.00% 5.59% 4.65% n.a. 5.13%
Matthews Asia Credit Opportunities Fund (GBP)
-1.07% -3.56% -3.56% 1.79% 2.88% 5.31% n.a. 6.90% 30/09/2015
J.P. Morgan Asia Credit Index (GBP)
0.94% -2.09% -2.09% -2.04% 6.17% 5.51% n.a. 6.93%
For the years ended December 31st
Name 2020 2019 2018 2017 2016
Matthews Asia Credit Opportunities Fund (USD)
0.93% 14.04% -4.13% 8.16% 10.42%
J.P. Morgan Asia Credit Index (USD)
6.33% 11.35% -0.77% 5.77% 5.81%
Matthews Asia Credit Opportunities Fund (GBP)
-2.52% 10.68% 1.18% -1.38% 32.84%
J.P. Morgan Asia Credit Index (GBP)
3.05% 7.05% 5.40% -3.38% 26.21%
For the period ended 31/03/2021
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Asia Credit Opportunities Fund (USD)
13.45% -7.33% 1.36% 6.09% 9.66% 30/09/2015
J.P. Morgan Asia Credit Index (USD)
9.00% 2.34% 5.53% 1.73% 4.80%
Matthews Asia Credit Opportunities Fund (GBP)
1.79% -1.88% 9.03% -5.90% 26.41% 30/09/2015
J.P. Morgan Asia Credit Index (GBP)
-2.04% 7.55% 13.61% -9.32% 20.46%

Source: Brown Brothers Harriman (Luxembourg) S.C.A., Index data from J.P. Morgan.

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.


(as of 31/03/2021)
8.63% Yield to Worst

Source: FactSet Research Systems, Bloomberg, Matthews

Portfolio Characteristics

(as of 31/03/2021)
Modified Duration
Number of Positions

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

Top 10 Positions

(as of 31/03/2021)
Name Sector Currency % Net Assets
Network i2i, Ltd., 5.650%, 04/15/2068 Communication Services U.S. Dollar 5.7
Indika Energy Capital III Pte, Ltd., 5.875%, 11/09/2024 Energy U.S. Dollar 5.2
ABJA Investment Co. Pte, Ltd., 5.450%, 01/24/2028 Materials U.S. Dollar 5.1
Wanda Properties International Co., Ltd., 7.250%, 01/29/2024 Real Estate U.S. Dollar 5.1
Viet Nam Debt & Asset Trading Corp., 1.000%, 10/10/2025 Financials U.S. Dollar 5.0
Tata Motors, Ltd., 5.875%, 05/20/2025 Consumer Discretionary U.S. Dollar 4.8
Luye Pharma Group, Ltd., Cnv., 1.500%, 07/09/2024 Health Care U.S. Dollar 4.4
Honghua Group, Ltd., 6.375%, 08/01/2022 Energy U.S. Dollar 4.4
KWG Group Holdings, Ltd., 5.875%, 11/10/2024 Real Estate U.S. Dollar 3.7
Sino-Ocean Land Treasure III, Ltd., 4.900%, 03/21/2068 Real Estate U.S. Dollar 3.5
TOTAL 46.9

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 31/03/2021)
  • Sector Allocation
  • Country Allocation
  • Currency Allocation
  • Quality Distribution
  • Asset Type Breakdown
Sector Fund
Real Estate 30.5
Financials 18.0
Energy 11.9
Consumer Discretionary 10.6
Communication Services 8.2
Materials 8.0
Health Care 6.2
Industrials 2.5
Foreign Government Bonds 2.4
Information Technology 0.9
Cash and Other Assets, Less Liabilities 0.8

"Foreign Government Bonds" category includes supranationals.
Cash and Other Assets may include the mark-to-market value of forward currency exchange contracts and certain derivative instruments.

Sector data (excluding Government Bonds) based on MSCI’s revised Global Industry Classification Standards. For more details, visit

By issuer's country of risk Fund
China/Hong Kong 47.8
India 18.5
Indonesia 13.2
Vietnam 7.4
Thailand 5.1
Philippines 2.5
Malaysia 2.3
South Korea 1.6
New Zealand 0.9
Cash and Other Assets, Less Liabilities 0.8

Not all countries are included in the benchmark index. Cash and Other Assets may include the mark-to-market value of forward currency exchange contracts and certain derivative instruments.
Supranational is an international organization in which member states transcend national boundaries, (ex. IMF).

Currency Fund Contribution To Duration
U.S. Dollar 100.0 2.9
Quality Distribution Fund
BB+ 5.1
BB 19.0
BB- 20.5
B+ 14.2
B 10.0
B- 4.2
CCC+ 1.5
Not Rated 24.8
Cash and Other Assets, Less Liabilities 0.8

Credit quality is provided for the underlying bond holdings of the Fund and does not include common equities, cash and other assets and percentage values will not total 100%. Credit quality rating symbols reflect that of S&P and generally credit ratings range from AAA (highest) to D (lowest). When ratings from Moody's, S&P and Fitch are available for a bond in the Fund, the middle rating of the three is used. When two ratings are available, the lowest rating is used. When only one rating is provided, that one is used. Foreign government bonds without a specific rating are assigned the country rating provided by one of the three agencies. Securities that are not rated by any one of the three agencies are reflected as such.
Sources: FactSet Research Systems, Moody's, S&P and Fitch

Asset Type Fund
Corporate Bonds 76.8
Convertible Bonds 15.0
Government Bonds 7.4
Cash and Other Assets, Less Liabilities 0.8

Cash and Other Assets may include the mark-to-market value of forward currency exchange contracts and certain derivative instruments.

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.


  • 3 YEAR
  • 5 YEAR

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 ©2021 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

Teresa  Kong, CFA photo
Teresa Kong, CFA

Lead Manager

Satya  Patel photo
Satya Patel

Lead Manager


Currency Record Date Ex Date Reinvest Date Payment Date Income Distributions
USD 24/03/2021 25/03/2021 26/03/2021 01/04/2021 $0.043225
GBP 24/03/2021 25/03/2021 26/03/2021 01/04/2021 £0.047775
USD 22/02/2021 23/02/2021 24/02/2021 02/03/2021 $0.043225
GBP 22/02/2021 23/02/2021 24/02/2021 02/03/2021 £0.047775
USD 25/01/2021 26/01/2021 27/01/2021 02/02/2021 $0.043225
GBP 25/01/2021 26/01/2021 27/01/2021 02/02/2021 £0.047775
USD 15/12/2020 16/12/2020 17/12/2020 31/12/2020 $0.148231
GBP 15/12/2020 16/12/2020 17/12/2020 31/12/2020 £0.164011
USD 28/09/2020 29/09/2020 30/09/2020 06/10/2020 $0.149573
GBP 28/09/2020 29/09/2020 30/09/2020 06/10/2020 £0.177483
USD 24/06/2020 25/06/2020 26/06/2020 02/07/2020 $0.153791
GBP 24/06/2020 25/06/2020 26/06/2020 02/07/2020 £0.179179
USD 25/03/2020 26/03/2020 27/03/2020 02/04/2020 $0.161264
GBP 25/03/2020 26/03/2020 27/03/2020 02/04/2020 £0.212289
View History

Fixed Income Distribution Information

Beginning in January 2021, the Matthews Asia Funds – Asia Credit Opportunities Fund will change the approach of distributing share classes from quarterly distribution payments to monthly distribution payments and will implement a stable cents-per-share distribution approach. For 2021, the monthly cents-per-share distribution factors are scheduled to be as follows below. Please note that the distribution amounts are subject to change at any time in the discretion of the Matthews Asia Funds and the Investment Manager. Any changes will be reflected on this website.

  A Distribution Share Class I Distribution Share Class (GBP) I Distribution Share Class
ISIN LU1275262571 LU1275263389 LU1275263116
Monthly Distribution Factor 0.041825 0.047775 0.043225


The Fund may, at its discretion, pay dividends out of the capital or effectively out of capital in respect of the distribution shares. Dividends may be distributed out of gross income while all or part of the fees and expenses are paid out of capital, resulting in an increase in distributable income for the payment of dividends and, therefore, the Fund may effectively pay dividend out of capital. Payment of dividends out of capital and/or effectively out of capital represents a return or withdrawal of part of an investor's original investment, or from any capital gains attributable to that original investment. Any distribution may result in an immediate reduction of the net asset value per share of the Fund.

Please note that a positive distribution yield does not imply a positive return, and past yields are no guarantee of future yields. 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.

As of April 1, 2014, distributions for this class of the sub fund will pay gross income which may result in expenses being paid out of capital and thereby limit an investor’s potential to generate total return and income.


Period ended 31 December 2020

For the year ending December 31, 2020, the Matthews Asia Credit Opportunities Fund returned 0.48% (A Acc Class) and 0.93% (I Dist Class), while its benchmark, the J.P. Morgan Asia Credit Index returned 6.33%. For the fourth quarter of the year, the Fund returned 4.01% (A Acc Class) and 4.14% (I Dist Class) versus 1.82% for the Index. 

Market Discussion:

2020 marked the end of a credit cycle—defined by a trend of falling spreads—as the global pandemic roiled markets. It also marked the beginning of a new credit cycle, as spreads staged a remarkable recovery as governments globally committed to unprecedented monetary and fiscal support to backstop the global economic recession due to COVID-19. Unlike past credit cycles where the lack of liquidity was the primary driver of defaults, solvency is becoming the primary driver as vulnerable sectors saw revenues, profits and free cash flows plummet and working capital needs rose. Fortunately, many Asia countries, led by China, have staged a remarkable recovery and do not appear to be suffering from long-term structural damage as containment proved to be relatively swift. Emerging Asia’s recovery has been relatively slow and uneven with containment incomplete including in India and Indonesia. This dichotomy has also been playing out with companies, with larger companies having unfettered liquidity while smaller companies struggled to survive.  The year closed with Asia default rates at 3.5%, compared to 9.7% in the U.S.

The fourth quarter can be described in two distinct sub-periods: before and after the U.S. election in November. The first month was dominated by worries, while the latter period provided a welcomed respite and positive returns across almost all risk assets. The average spread of the J.P. Morgan Asia Credit Index tightened 39 basis points (0.39%) in the quarter while the high yield portion of the Index tightened 98 basis points (0.98%).

In the pre-election period, there were several sources of uncertainty: conflicting news on the likelihood of U.S. fiscal stimulus with the market widely perceiving a second stimulus as necessary given the weakened U.S. economy due to the pandemic; large increases in daily new confirmed cases of COVID-19 in the U.S. and Europe; and highly uncertain election results. And in Asia, the large divergence of recovery between East Asia (China, Japan, South Korea) and the rest of Asia and room for further fiscal stimulus was an additional question. These uncertainties led to market caution early in the quarter.

In the post-election period, risk sentiment improved for a number of reasons, including a Democratic Party win with the possibility that Democrats might take the majority in the Senate—viewed as having a much higher chance of passing a large stimulus. At the same time, successful COVID vaccine trials brought in view the end of the pandemic. The fact that a “Hard Brexit” did not materialize was an additional piece of good news. Within Asia, we saw volatility after President Trump signed Executive Orders directed at China. One Executive Order stipulates that all U.S. funds must divest from a list of Chinese companies associated with the military.

Performance Contributors and Detractors:

In general, lower-rated securities outperformed higher-rated securities in the fourth quarter. The portfolio’s overweight in BB-rated securities helped Fund performance. Basic industries and real estate were the top contributors to performance, driven by securities such as Indika, Tata Industries, and Adaro within basic industries, and within real estate, Lippo Karawaci, KWG, and CIFI. However, security selection in Pan Brothers detracted from performance, as Pan Brothers was downgraded during the quarter due to concerns about their ability to refinance outstanding bank loans. In addition, exposure to Luye Pharmaceutical, a Chinese pharmaceutical company, also detracted from performance.

For the year 2020, Fund performance was mainly hurt by our overweight to high yield credit relative to investment grade, which had outperformed in the year as markets sought “safety”. But security selection in the investment grade space, including Syngenta and longer-dated Indonesian quasi-sovereigns credit, helped the Fund in the year.

In terms of country allocation, overweights in India and Vietnam were the top contributors while allocation to Indonesia, which failed to effectively control COVID-19, and Sri Lanka, which was hurt by pandemic-driven declines in tourism, were detractors. Within China, Fund performance was roughly in line with the benchmark. Contributors included real estate developers and internet names such as Baozun and iQiyi, while underweights in investment grade-rated names detracted.

Notable Portfolio Changes:

2020 was a year of many surprises and required continual rotation in search of value. We sold names that had benefited or recovered quickly from the COVID-crisis such as Weibo and Citic Telecom and redeployed capital into what we believed were good companies where recovery was more delayed, including Chinese apparel brand Bosideng, and Jollibee, a Philippines restaurant chain. We reduced risk in Pakistan and Sri Lanka as we expected frontier markets nations to have both less ability to deal with a public health crisis and slower economic recoveries. We also rotated capital within Indonesia, from investment grade state-owned companies, such as InAlum and Cikarang Listrindo, into higher yield names, such as Sritex, a textile manufacturer, and Adaro, a coal miner. We also added high yield names such as Tata Motors of India, which has embarked on an ambitious debt reduction plan.

In the fourth quarter, we exited Chinese apparel maker Bosideng as it had rallied substantially and hit our price target. We switched out of China Jinmao as we saw rising risks associated with Chinese state-owned entities after the passage of President Trump’s Executive Order. We added Times China in replacement, as we liked its exposure to the fast-growing Pearl River Delta region. We added the convertible bonds of South Korean internet firm Kakao (Daum) to increase exposure to the high-growth tech sector.


Having experienced the worst of the credit cycle in 2020, we expect markets and economies globally to continue their recoveries in 2021. We will likely see policymakers gradually ease up on the unprecedented levels of support and accommodation seen in 2020, but largely expect monetary and fiscal policies to remain supportive for the foreseeable future.  As such, we expect default rates in Asia to tick up slightly from 2020 year end levels and stay well contained in the mid-single digits.

Despite the strong support of policymakers, we continue to monitor some key risks, including new variants of COVID-19 and how this might affect the economic recovery. Additionally, we are watching the pace of recovery of countries such as China which has largely contained the virus. While we do expect further U.S. stimulus as well as vaccine distribution to solidify the economic recovery going into 2021, we are monitoring for any disruptions to the base case. In this base case, we believe that U.S. dollar-denominated, non-investment grade Asia bonds potentially offer the most attractive risk-adjusted returns.

Looking ahead, we are cautiously optimistic that U.S. – China relations could normalize to a more rules-based and engagement-based way of interaction. While the U.S. will continue to focus on rectifying grievances in trade and technology competition, we are hopeful that less erratic, Executive Order-driven policies will reduce Asian markets’ volatility.                                 

As markets continue to assess the uncertainties, we expect idiosyncratic risks and company-specific risks to be the dominant concern for markets. We believe the market will shift its focus to determine to what degree each sector and each company is affected by the imminent vaccine distribution. As a result, dispersion between geographical regions and between different credit qualities will increase going forward.


Rolling 12 Month Returns For the period ended 31/03/2021 - I (Dist)
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Asia Credit Opportunities Fund (USD)
13.45% -7.33% 1.36% 6.09% 9.66% 30/09/2015
J.P. Morgan Asia Credit Index (USD)
9.00% 2.34% 5.53% 1.73% 4.80%
Matthews Asia Credit Opportunities Fund (GBP)
1.79% -1.88% 9.03% -5.90% 26.41% 30/09/2015
J.P. Morgan Asia Credit Index (GBP)
-2.04% 7.55% 13.61% -9.32% 20.46%

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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