Snapshot
- Total return strategy seeks to access the growth of Asia Pacific ex Japan with lower volatility
- Unconstrained all-cap portfolio with a quality bias
- Flexible approach offers participation in both growth and value markets
30/11/2015
Inception Date
7.97%
YTD Return (USD)
(as of 26/01/2021)
$26.43
Price (USD)
(as of 26/01/2021)
$367.34 million
Fund Assets
(as of 31/12/2020)
Objective
Seeks total return with an emphasis on providing current income.
Strategy
The Fund pursues its objective by primarily investing in companies that exhibit attractive dividend yields and/or the potential to grow dividends over time. 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 (including, for example, investment trusts and other financial instruments) of companies located in the Asia ex Japan region.
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. There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.
The risks associated with investing in the Fund can be found in the prospectus.
Fund Facts
| Inception Date | 30/11/2015 | |
| Fund Assets | $367.34 million (31/12/2020) | |
| Base Currency | USD | |
| ISIN: | LU1311311358 (USD) LU1311311515 (GBP) LU1311311788 (EUR) | |
| Bloomberg Symbol | MAAEIAU:LX (USD) MAAEIAG:LX (GBP) MAEJDIE: LX (EUR) | |
| Benchmark | MSCI All Country Asia ex Japan Index | |
| Geographic Focus | Asia ex Japan: Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region, excluding Japan | |
Fees & Expenses
| Management Fee | 0.75% | |
| Total Expense Ratio As of 31/03/2020 | 1.25% ( USD ) 1.25% ( GBP ) | |
Performance
- Monthly
- Quarterly
- Calendar Year
- Rolling 12 Month
Returns
As of 31/12/2020
As of 31/12/2020
For the years ended December 31st
For the period ended 31/12/2020
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 31/12/2020)
1.53%
Dividend Yield
Source: FactSet Research Systems, Bloomberg, Matthews
Portfolio Characteristics
(as of 31/12/2020)58
Number of Securities
Source: Brown Brothers Harriman (Luxembourg) S.C.A
24.9x
P/E using FY1 estimates
19.8x
P/E using FY2 estimates
$110.2 billion
Weighted Average Market Cap
Source: FactSet Research Systems
Top 10 Holdings
(as of 31/12/2020)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
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
Ratings (as of 31/12/2020)
CATEGORY: Asia ex-Japan Equity
Square Mile Rating Report
FE FundInfo Crown Fund Rating
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*
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.
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.
S. Joyce Li, CFA
Co-Manager
S. Joyce Li, CFA
Portfolio Manager
S. Joyce Li is a Portfolio Manager at Matthews Asia and co-manages the firm's China Dividend, Asia ex Japan Dividend, and Asia 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.
*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.
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 2020
For the year ending 31 December 2020, the Matthews Asia ex-Japan Dividend Fund returned 51.86%, while its benchmark, the MSCI All Country Asia ex-Japan Index returned 25.36%. For the fourth quarter of the year, the Fund returned 21.13% versus 18.66% for the Index.
Market Environment:
Asian equities delivered a strong performance in 2020, despite the severe blow to the region's economy by the COVID-19 pandemic. After suffering a steep loss due to the onset of the virus outbreak early in the year, Asian markets quickly found a firm bottom and staged a sharp rebound, thanks to the unprecedented liquidity injection and fiscal stimulus measures by governments. Investors' confidence was later further bolstered by clear signs of a speedy recovery of the Chinese economy and the breakthrough in COVID vaccine development. Market gained further momentum, pushing Asian equities to a record-high.
Performance Contributors and Detractors:
Our total-return investment approach provides the flexibility of investing in both dividend-paying stocks and dividend growth stocks. During the market meltdown early in the year, we aggressively increased our exposure to dividend growth stocks whose valuation was brought down significantly by the market dislocation but their structural growth remained intact. This pivot towards dividend growth stocks paid off well for the strategy.
From a country perspective, China/Hong Kong contributed most to the Fund performance for 2020, helped by strong stock selection and an overweight allocation relative to the benchmark. China’s effective response in containing the pandemic and a swift recovery of its economy provided a positive backdrop for Chinese equities to perform well. In addition, the further opening up of China's onshore capital market attracted strong capital inflow from global investors. Our portfolio benefited from an increased allocation to China-A shares, as several of our A-share holdings were among the top-performing stocks for the year. On the other hand, our holdings in Vietnam, which is not in the benchmark, detracted the most from relative performance. While Vietnam did an effective job at managing the pandemic, the Vietnamese equity market, a frontier market with limited liquidity, lagged during the broad market rally in Asia.
From a sector perspective, the portfolio’s underweight to and stock selection in financials was the top contributor to Fund performance. The financials sector more broadly was beaten down in the year on economic concerns. By investing very selectively in the sector and focusing on companies with strong balance sheets and dividends, we were able to generate attractive performance in the sector. On the other hand, communication services was the bottom-performing sector. Several of our traditional telecom stocks underperformed during the year, as growth-oriented stocks outperformed value stocks.
Turning to individual stocks, among the top-performing stocks for the year was our holding in LG Chemical based in South Korea. Traditionally considered a petrochemical business, LG Chemical has been investing aggressively in its electric vehicle (EV) battery business over the last several years. Today, LG Chemical is ranked among the top EV battery makers globally. Recognizing this paradigm shift of the global automobile industry, investors started bidding up share prices of key players along the EV industry value chain, and the company’s share price appreciated significantly. On the flipside, On the flipside, Geely Automotive, a Chinese auto original equipment manufacturing business, was among the bottom-performing holdings for the year. Geely’s share price suffered a steep loss during the early onset of the virus outbreak in China, as consumer demand for large-ticket items, like automobiles, collapsed. In addition, Geely’s proposed business combination with Volvo, a sister company controlled by the same parent group, also added further uncertainties of its balance sheet leverage. We decided to exit the stock and re-deployed capital to other opportunities presented by the COVID-led market dislocation.
Portfolio Changes:
In the fourth quarter, we initiated several new positions, among which is Mr. DIY, a new IPO company operating a discount-store chain in Malaysia. We were attracted by the company’s efficient business model, attractive financial return profile, and strong cash-generation ability. In addition, founder continues to retain a large stake in the company and manages the business on a daily-basis. This “founder/operator” setup, in our mind, is a positive sign of interest alignment between management and shareholders, and bodes well for dividend growth potential.
During the quarter, we also exited a few stocks, one of which was China Resources Land, a Chinese real estate developer. We exited our position as our investment thesis for the company—the unlocking of value from a potential spinoff of CR Land's property management business—materialized after a successful listing of its property management division in Hong Kong.
Outlook:
The resurgence of COVID-19 and the vaccine rollout are likely to drive the market volatility in the near term. Taking a more disciplined approach managing the pandemic, Asia is relatively better positioned for a potential post-pandemic economic recovery. Corporate earnings recovery and liquidity conditions should be both closely monitored to determine the strength of the current market rally. Geopolitical factors, especially U.S. – China relations under the Biden administration, will also influence the unfolding of Asia market in the new year. We believe a total-return approach, balancing dividend income with dividend growth, should continue to help us uncover attractive market opportunities in 2021.
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