Snapshot
- Total return strategy seeks to access the growth of Asia Pacific with lower volatility
- Unconstrained all-cap portfolio with a quality bias
- Flexible approach offers participation in both growth and value markets
30/04/2010
Inception Date
-5.15%
YTD Return (USD)
(as of 24/01/2022)
$22.86
Price (USD)
(as of 24/01/2022)
$230.39 million
Fund Assets
(as of 31/12/2021)
Objective
Seeks total return with an emphasis on providing current income.
Strategy
The Fund seeks to achieve its investment objective by investing, directly or indirectly, at least 65% of its total net assets, in income-paying publicly traded common stocks, preferred stocks, convertible preferred stocks and other equity-related instruments of companies located in the Asia Pacific region, and may invest the remainder of its net assets in other permitted assets on a worldwide basis.
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. There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.
These and other risks associated with investing in the Fund can be found in the prospectus.
Fund Facts
| Inception Date | 30/04/2010 | |
| Fund Assets | $230.39 million (31/12/2021) | |
| Base Currency | USD | |
| ISIN: | LU0491818331 (USD) LU0594556648 (GBP) LU0491818174 (EUR) | |
| Bloomberg Symbol | MATAADI:LX (USD) MATAAIA:LX (GBP) MAASDIE:LX (EUR) | |
| Benchmark | MSCI All Country Asia Pacific Index | |
| Geographic Focus | Asia Pacific: Consists of all countries and markets in Asia, as well as Australia and New Zealand 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 ) 0.90% ( EUR ) | |
Performance
- Monthly
- Quarterly
- Calendar Year
- Rolling 12 Month
Returns
As of 31/12/2021
As of 31/12/2021
For the years ended December 31st
For the period ended 31/12/2021
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.
Yield
(as of 31/12/2021)
1.49%
Dividend Yield
Source: FactSet Research Systems, Bloomberg, Matthews Asia
Portfolio Characteristics
(as of 31/12/2021)Sources: Factset Research Systems, Inc.
Risk Metrics (3 Yr Return)
(as of 31/12/2021)1.13%
Alpha
0.92
Beta
89.91%
Upside Capture
86.55%
Downside Capture
0.78
Sharpe Ratio
0.03
Information Ratio
5.89%
Tracking Error
85.08
R²
Fund Risk Metrics are reflective of Class I USD ACC shares.
Sources: Zephyr StyleADVISOR
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
- Asset Type Breakdown
- 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.
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
(as of 31/12/2021)
CATEGORY: Asia-Pacific Equity
Square Mile Rating Report
Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.
Overall Morningstar RatingTM is reflective of the noted 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*
Yu Zhang, CFA
Lead Manager
Yu Zhang, CFA
Portfolio Manager
Yu Zhang is a Portfolio Manager at Matthews Asia. He manages the firm's Asia Dividend and Asia ex Japan Dividend Strategies, and co-manages the China Dividend Strategy. Prior to joining Matthews Asia in 2007 as a Research Associate, Yu was an Analyst researching Japanese companies at Aperta Asset Management from 2005 to 2007. Before receiving a graduate degree in the U.S., he was an Associate in the Ningbo, China office of Mitsui & Co., a Japanese general trading firm. Yu received a B.A. in English Language from the Beijing Foreign Studies University, an MBA from Suffolk University and an M.S. in Finance from Boston College. He is fluent in Mandarin.
S. Joyce Li, CFA
Lead Manager
S. Joyce Li, CFA
Portfolio Manager
S. Joyce Li is a Portfolio Manager at Matthews Asia and manages the firm’s Asia Dividend Strategy and co-manages the Asia ex Japan Dividend and China Dividend Strategies. Prior to joining the firm in 2016, she was a Portfolio Manager and Principal at Marvin & Palmer Associates, where she co-managed equity investments in the Asia Pacific markets between 2007 and 2016. Joyce started her investment career as a Senior Investment Associate at Wilmington Trust. Joyce received an MBA with honors from the Wharton School of the University of Pennsylvania and a M.S. in Computer Science from the University of Virginia. She is fluent in Mandarin and Cantonese.
Robert J. Horrocks, PhD
Co-Manager
Robert J. Horrocks, PhD
Chief Investment Officer and Portfolio Manager
Robert Horrocks is Chief Investment Officer and Portfolio Manager at Matthews Asia and has been a Matthews Asia Funds Trustee since 2018. He manages the firm's Asian Growth and Income and co-manages the Asia Dividend and Asia ex Japan Dividend Strategies. As Chief Investment Officer, Robert oversees the firm's investment process and investment professionals and sets the research agenda for the investment team. Before joining Matthews Asia in 2008, Robert was Head of Research at Mirae Asset Management in Hong Kong. From 2003 to 2006, Robert served as Chief Investment Officer for Everbright Pramerica in China, establishing its quantitative investment process. He started his career as a Research Analyst with WI Carr Securities in Hong Kong before moving on to spend eight years working in several different Asian jurisdictions for Schroders, including stints as Country General Manager in Taiwan, Deputy Chief Investment Officer in Korea and Designated Chief Investment Officer in Shanghai. Robert earned his PhD in Chinese Economic History from Leeds University in the United Kingdom, and is fluent in Mandarin.
Sherwood Zhang, CFA
Co-Manager
Sherwood Zhang, CFA
Portfolio Manager
Sherwood Zhang is a Portfolio Manager at Matthews Asia. He manages the firm's China Dividend Strategy and co-manages the Asia Dividend and Asia ex Japan Dividend Strategies. Prior to joining Matthews Asia in 2011, Sherwood was an analyst at Passport Capital from 2007 to 2010, where he focused on such industries as property and basic materials in China as well as consumer-related sectors. Before earning his MBA in 2007, Sherwood served as a Senior Treasury Officer for Hang Seng Bank in Shanghai and Hong Kong, and worked as a Foreign Exchange Trader at Shanghai Pudong Development Bank in Shanghai. He received his MBA from the University of Maryland and his Bachelor of Economics in Finance from Shanghai University. Sherwood is fluent in Mandarin and speaks conversational Cantonese.
*No Hong Kong based Co-Manager for the Matthews Asia Funds will exercise investment discretion for or on behalf of the Fund in Hong Kong.
Latest Dividend 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 31 December 2021
For the year ending 31 December 2021, the Matthews Asia Dividend Fund returned -1.75%, while its benchmark, the MSCI All Country Asia Pacific Index returned -1.19%. For the fourth quarter of the year, the Fund returned -1.79% versus -1.80% for the Index.
Market Environment:
Asian equities faced several macro headwinds in 2021, with the MSCI All Country Asia Pacific Index unable to deliver a positive return for the year. Market concerns that central banks may start a monetary tightening cycle to combat rapidly rising inflation put downward pressure on equity prices. A slowing Chinese economy, coupled with its regulatory tightening and real estate clampdown, added further uncertainties. Among major markets in Asia, India and Taiwan were top performers, as Indian equities benefited from a relatively easing domestic liquidity environment and Taiwan’s tech-heavy economy benefited from a sustained global demand recovery for technology products. On the other hand, overseas-listed Chinese stocks struggled. In addition to the macro challenges, the potential delisting of Chinese ADRs (American Depositary Receipts) from U.S. capital markets triggered a massive sell-off of overseas-listed Chinese equities during the year-end period. As investors were recalibrating against a potential monetary regime change, markets also witnessed a significant style rotation, as growth stocks sold off, underperforming value and cyclical stocks.
Performance Contributors and Detractors:
From a country perspective, the portfolio’s underweight allocation to Taiwan was a significant detractor from relative performance for the year. Additionally, the portfolio’s stock selection in Japan detracted, as certain holdings, including a 5G testing equipment company and a factory and logistics automation company, were hurt by component shortages in their respective supply chains. On the other hand, stock selection in India and Australia was a significant contributor to relative performance in 2021.
From a sector perspective, stock selection in the information technology sector detracted the most from relative performance. Our preference for technology companies in the industrial supply chain over the semiconductor equipment space during the period hurt our relative performance. On the other hand, stock selection in the consumer discretionary sector added the most to relative performance. The portfolio has several holdings with solid sales growth driven by the global consumption rebound, while maintaining low exposure to Chinese internet and e-commerce players during the period.
Turning to individual stocks, Minda Industries, an Indian auto-parts business, was the top-performing stock for the year. Minda has been expanding its component business with an increased focus on the emerging vehicle electrification trends in both two-wheel and four-wheel segments in India. A positive recovery of the underlying Indian market and the structural growth potential from its electrical vehicle component business initiatives drove Minda’s share price significantly higher.
On the flip side, our position in Chinese IVF (in-vitro fertilization) specialist Jinxin Fertility Group was the top detractor to absolute performance for the year. With clinic assets in both China and overseas markets, Jinxin’s underlying IVF business was heavily impacted by the prolonged disruption of the COVID-19 pandemic. In addition, the regulatory tightening targeting the health care sector in China also raised investors’ concern that medical services businesses such as Jinxin could be affected by a reduction in pricing power. With a delay in turnaround of the business fundamentals and weakened sentiment towards the sector, Jinxin’s share price moved markedly lower.
Notable Portfolio Changes:
Throughout the year we adopted a barbell approach, balancing higher dividend-yielding stocks with structural dividend growers. During the quarter, we increased holdings in companies that demonstrated strong pricing power and resilient market share in an inflationary environment. Among the additions was Inner Mongolia Yili Industrial Group, the largest dairy company in China. We expect the company to see improved profitability in 2022 with recent price hikes, product upgrades and a benign competitive environment. Consumers’ rising awareness of the health benefits of high-quality dairy products during the pandemic has been a tailwind for Yili’s sales growth and we believe this trend will continue.
On the other hand, we exited several holdings during the quarter, including some dividend growth stocks whose underlying fundamentals no longer met our dividend growth expectation. One such name was Hugel Inc., a leading South Korean biopharmaceutical company that specializes in aesthetics-based treatments. During the quarter, South Korea’s Ministry of Food and Drug Safety made an unexpected announcement that Hugel violated certain domestic shipment clearance regulations. As a result we exited the position, as the new uncertainty on Hugel’s licenses in various markets disproved our original investment thesis.
Outlook:
Looking ahead, we expect some of the macro headwinds experienced in 2021 to lessen in 2022. Despite the current surge of the latest COVID-19 virus variant globally, vaccines have proven effective in preventing or lessening severe illness and death. As Asian countries continue to ramp up vaccination efforts, a potential “return to normalcy” at some point this year could bring out pent-up demand for consumption and corporate investment. Supply-chain bottlenecks could start to ease as well.
On the policy front, China has reached an inflection point in its monetary and fiscal policies, moving to provide more support for its economy. The Regional Comprehensive Economic Partnership (RCEP), an all-important trade agreement signed by 15 Asia Pacific economies, went into effect on 1 January 2022. We believe further economic integration under RCEP bodes well for the region’s long-term growth outlook. While recent market volatility was triggered by concerns of an accelerated tightening cycle by the U.S. Federal Reserve, we believe that investors will shift their focus back to companies’ fundamentals and their ability to deliver earnings growth, once the inflation expectation is re-set. Against such backdrop, we believe it is prudent to maintain an overall balance between structural dividend growers and high-yielding dividend payers whose business can benefit within an inflationary environment.
Earnings growth is not representative of the Fund’s future performance.
Rolling 12 Month Returns For the period ended 31/12/2021 - I (Acc)
Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg