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Asia Growth & Income

Matthews Asia Dividend Fund

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
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As of 31/12/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Dividend Fund (USD)
-0.12% -1.79% -1.75% -1.75% 12.60% 10.68% 9.23% 7.83% 30/04/2010
MSCI All Country Asia Pacific Index (USD)
1.93% -1.80% -1.19% -1.19% 12.41% 10.23% 8.29% 6.56%
Matthews Asia Dividend Fund (GBP)
-1.21% -2.01% -0.44% -0.44% 10.66% 8.71% 10.74% 9.55% 28/02/2011
MSCI All Country Asia Pacific Index (GBP)
-0.44% -2.24% -0.28% -0.28% 10.13% 8.22% 9.79% 7.83%
Matthews Asia Dividend Fund (EUR)
0.14% 0.36% 6.39% 6.39% 13.06% n.a. n.a. 7.52% 15/05/2017
MSCI All Country Asia Pacific Index (EUR)
0.89% 0.08% 6.31% 6.31% 12.61% n.a. n.a. 7.42%
As of 31/12/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Dividend Fund (USD)
-0.12% -1.79% -1.75% -1.75% 12.60% 10.68% 9.23% 7.83% 30/04/2010
MSCI All Country Asia Pacific Index (USD)
1.93% -1.80% -1.19% -1.19% 12.41% 10.23% 8.29% 6.56%
Matthews Asia Dividend Fund (GBP)
-1.21% -2.01% -0.44% -0.44% 10.66% 8.71% 10.74% 9.55% 28/02/2011
MSCI All Country Asia Pacific Index (GBP)
-0.44% -2.24% -0.28% -0.28% 10.13% 8.22% 9.79% 7.83%
Matthews Asia Dividend Fund (EUR)
0.14% 0.36% 6.39% 6.39% 13.06% n.a. n.a. 7.52% 15/05/2017
MSCI All Country Asia Pacific Index (EUR)
0.89% 0.08% 6.31% 6.31% 12.61% n.a. n.a. 7.42%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews Asia Dividend Fund (USD)
-1.75% 31.32% 10.66% -12.85% 33.49% 4.09% 3.87% -0.96% 12.26% 21.06%
MSCI All Country Asia Pacific Index (USD)
-1.19% 20.07% 19.74% -13.25% 32.04% 5.21% -1.68% 0.29% 12.19% 17.05%
Matthews Asia Dividend Fund (GBP)
-0.44% 26.77% 7.36% -7.98% 21.75% 25.18% 9.10% 5.11% 9.70% 16.00%
MSCI All Country Asia Pacific Index (GBP)
-0.28% 16.36% 15.12% -7.86% 20.61% 25.50% 4.01% 6.53% 10.11% 11.91%
Matthews Asia Dividend Fund (EUR)
6.39% 20.20% 13.02% -8.85% n.a. n.a. n.a. n.a. n.a. n.a.
MSCI All Country Asia Pacific Index (EUR)
6.31% 10.15% 21.94% -8.88% n.a. n.a. n.a. n.a. n.a. n.a.
For the period ended 31/12/2021
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Asia Dividend Fund (USD)
-1.75% 31.32% 10.66% -12.85% 33.49% 30/04/2010
MSCI All Country Asia Pacific Index (USD)
-1.19% 20.07% 19.74% -13.25% 32.04%
Matthews Asia Dividend Fund (GBP)
-0.44% 26.77% 7.36% -7.98% 21.75% 28/02/2011
MSCI All Country Asia Pacific Index (GBP)
-0.28% 16.36% 15.12% -7.86% 20.61%
Matthews Asia Dividend Fund (EUR)
6.39% 20.20% 13.02% -8.85% n.a. 15/05/2017
MSCI All Country Asia Pacific Index (EUR)
6.31% 10.15% 21.94% -8.88% 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.

Yield

(as of 31/12/2021)
1.49% Dividend Yield

Source: FactSet Research Systems, Bloomberg, Matthews Asia

Portfolio Characteristics

(as of 31/12/2021)
Fund Benchmark
Number of Positions 59 1,541
Weighted Average Market Cap $57.0 billion $108.7 billion
Active Share 91.5 n.a.
P/E using FY1 estimates 18.3x 14.2x
P/E using FY2 estimates 17.3x 13.7x
Price/Cash Flow 16.9 10.4
Price/Book 2.7 1.7
Return On Equity 17.1 12.9
EPS Growth (3 Yr) 4.2% -5.0%

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

Fund Risk Metrics are reflective of Class I USD ACC shares.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 31/12/2021)
Name Sector Country % Net Assets
Minth Group, Ltd. Consumer Discretionary China/Hong Kong 4.9
Minda Industries, Ltd. Consumer Discretionary India 4.0
Tencent Holdings, Ltd. Communication Services China/Hong Kong 3.7
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 3.0
KATITAS Co., Ltd. Real Estate Japan 2.9
MISUMI Group, Inc. Industrials Japan 2.7
Breville Group, Ltd. Consumer Discretionary Australia 2.3
FPT Corp. Information Technology Vietnam 2.3
Asia Commercial Bank JSC Financials Vietnam 2.3
IDP Education, Ltd. Consumer Discretionary Australia 2.2
TOTAL 30.3

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).

Asset Type Fund
Common Equities and ADRs 94.5
Preferred Equities 1.2
Cash and Other Assets, Less Liabilities 4.4

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

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 photo
Yu Zhang, CFA

Lead Manager

S. Joyce Li, CFA photo
S. Joyce Li, CFA

Lead Manager

Robert J. Horrocks, PhD photo
Sherwood  Zhang, CFA photo
Sherwood Zhang, CFA

Co-Manager

*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.

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)
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Asia Dividend Fund (USD)
-1.75% 31.32% 10.66% -12.85% 33.49% 30/04/2010
MSCI All Country Asia Pacific Index (USD)
-1.19% 20.07% 19.74% -13.25% 32.04%
Matthews Asia Dividend Fund (GBP)
-0.44% 26.77% 7.36% -7.98% 21.75% 28/02/2011
MSCI All Country Asia Pacific Index (GBP)
-0.28% 16.36% 15.12% -7.86% 20.61%
Matthews Asia Dividend Fund (EUR)
6.39% 20.20% 13.02% -8.85% N.A. 15/05/2017
MSCI All Country Asia Pacific Index (EUR)
6.31% 10.15% 21.94% -8.88% 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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