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Asia Growth & Income

Matthews Asia ex Japan Dividend Fund

 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

6.05%

YTD Return (USD)

(as of 03/08/2021)

$25.96

Price (USD)

(as of 03/08/2021)

$481.54 million

Fund Assets

(as of 30/06/2021)

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 $481.54 million (30/06/2021)
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 31/03/2021 1.00% ( USD ) 0.99% ( GBP ) 0.90% ( EUR )

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
    Returns
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As of 30/06/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
0.45% 8.11% 9.48% 50.65% 20.47% 20.61% n.a. 19.32% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
-0.09% 3.66% 6.51% 40.03% 12.54% 14.82% n.a. 13.56%
Matthews Asia ex Japan Dividend Fund (GBP)
2.80% 7.40% 7.92% 33.36% 18.39% 19.84% n.a. 21.03% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
2.81% 3.53% 5.40% 25.25% 10.85% 14.07% n.a. 15.32%
As of 30/06/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
0.45% 8.11% 9.48% 50.65% 20.47% 20.61% n.a. 19.32% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
-0.09% 3.66% 6.51% 40.03% 12.54% 14.82% n.a. 13.56%
Matthews Asia ex Japan Dividend Fund (GBP)
2.80% 7.40% 7.92% 33.36% 18.39% 19.84% n.a. 21.03% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
2.81% 3.53% 5.40% 25.25% 10.85% 14.07% n.a. 15.32%
For the years ended December 31st
Name 2020 2019 2018 2017 2016
Matthews Asia ex Japan Dividend Fund (USD)
51.86% 16.73% -12.37% 47.29% 6.89%
MSCI All Country Asia ex Japan Index (USD)
25.36% 18.52% -14.12% 42.08% 5.76%
Matthews Asia ex Japan Dividend Fund (GBP)
46.62% 13.21% -7.38% 34.23% 28.50%
MSCI All Country Asia ex Japan Index (GBP)
21.49% 13.94% -8.78% 29.78% 26.15%
For the period ended 30/06/2021
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
50.65% 14.11% 1.70% 18.38% 23.33% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
40.03% 1.97% -0.18% 10.21% 27.06%
Matthews Asia ex Japan Dividend Fund (GBP)
33.36% 18.00% 5.43% 16.83% 27.51% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
25.25% 5.03% 3.55% 8.43% 30.76%

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 30/06/2021)
1.28% Dividend Yield

Source: FactSet Research Systems, Bloomberg, Matthews

Portfolio Characteristics

(as of 30/06/2021)
Fund Benchmark
Number of Positions 58 1,204
Weighted Average Market Cap $75.6 billion $183.0 billion
Active Share 84.5 n.a.
P/E using FY1 estimates 19.1x 15.1x
P/E using FY2 estimates 16.5x 13.8x
Price/Cash Flow 14.5 10.3
Price/Book 2.5 2.1
Return On Equity 15.8 13.0
EPS Growth (3 Yr) 15.5% 15.5%

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Factset Research Systems, Inc., Zephyr StyleADVISOR, Matthews Asia

Top 10 Holdings

(as of 30/06/2021)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 3.8
Tencent Holdings, Ltd. Communication Services China/Hong Kong 2.9
Link REIT Real Estate China/Hong Kong 2.7
E Ink Holdings, Inc. Information Technology Taiwan 2.6
HDFC Bank, Ltd. Financials India 2.3
LG Chem Ltd. Materials South Korea 2.3
AIA Group, Ltd. Financials China/Hong Kong 2.2
Samsung Electronics Co., Ltd. Information Technology South Korea 2.2
MediaTek, Inc. Information Technology Taiwan 2.1
ESR Kendall Square REIT Co., Ltd. Real Estate South Korea 2.1
TOTAL 25.2

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 30/06/2021)
  • 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 95.4
Cash and Other Assets, Less Liabilities 4.6

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
(as of 29/07/2021)

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

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

Co-Manager

S. Joyce Li, CFA photo
S. Joyce Li, 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 30 June 2021

For the first half of 2021, the Matthews Asia ex Japan Dividend Fund returned 9.48%, while its benchmark, the MSCI All Country Asia ex-Japan Index, returned 6.51% over the same period. For the quarter ending 30 June, the Fund returned 8.11%, while the benchmark returned 3.66%.

Market Environment:

The first half of 2021 was positive for Asian equities, led by India and Taiwan. A semi-synchronized global economic recovery gained momentum throughout the period providing support to cyclically oriented names, despite interruption from waves of COVID-19 resurgence. South Korean equities also performed strongly in the first half of 2021. A combination of low valuations and a cyclical recovery in earnings coming out of the COVID-19 pandemic has proven to be a confluence of upside catalysts. Meanwhile, most ASEAN (Association of South East Asian Nations) markets were lackluster.

Performance Contributors and Detractors:

During the first half of 2021, our stock selection in Vietnam was the top contributor to the Fund’s relative performance from a country perspective. On the other hand, our underweight and stock selection in India detracted the most year to date. From a sector perspective, stock selection in real estate and information technology added most to relative performance, as the portfolio’s holdings in Chinese property management companies and an information technology outsourcing service company in Vietnam delivered strong share performance. On the other hand, stock selection in communication services and materials sectors detracted the most from relative performance, as our holdings in a fixed broadband operator in Hong Kong and an electric vehicle battery manufacturer in South Korea suffered lackluster share performance.

By individual securities, our holdings in Vietnam’s FPT Corp. and Asia Commercial Joint Stock Bank were among the top contributors to performance. These Vietnamese stocks, each a leader in its respective industry in the country—FPT is the largest information technology company and Asia Commercial Bank is the largest private bank by assets—bounced back strongly during the second quarter once the market digested the COVID situation and re-focused on the companies’ long-term structural growth strength.

On the other hand, our position in Miniso Group, a Chinese specialty retail store business, was the largest detractor to absolute performance. Miniso’s overseas store operations continued suffering disruption caused by a prolonged COVID-19 pandemic outbreak, and its share performance languished during the period.

Notable Portfolio Changes:

During the second quarter, among the several new positions we initiated is Autel Intelligent Technology Corp., an automotive after-market diagnostics equipment manufacturer listed on the Chinese A-share market. Under its own “Autel” brand name, the company has been successfully penetrating key overseas markets, including the U.S., thanks to its excellent product quality and competitive pricing. With a continuing emphasis on (“R&D”) (Autel is spending about 20% of sales in R&D), we believe the company’s market-share gain momentum can be further sustained, and the monetization potential of its diagnostics software could provide further upside to Autel’s profit margin. With a 50%-dividend payout ratio, Autel is already sharing its rapid business growth via a rising dividend payment to all shareholders.

To fund some of the new purchases, we exited several holdings in consumer staples, communications, and consumer discretionary sectors, including those with expensive valuation multiples or slowing growth profiles.

Outlook:

After a rather disruptive rotation in the first half, equity markets have more or less re-adjusted to the new environment, pricing in a rising inflation expectation and potential tapering of loose monetary policy. Looking ahead, despite the lingering COVID resurgence impact, we remain constructive on Asian equities, supported by a broadening economic recovery and solid corporate earnings growth. Compared to major global markets, Asia ex Japan equities (represented by the MSCI AC Asia ex Japan Index) still trade at a reasonable valuation level of 15x forward P/E with consensus earnings growth of 15%. Heading into the second half of 2021 and beyond, cyclical businesses are likely to lead the early earnings recovery phase in our view, while structural growth drivers such as domestic consumption and industrial upgrades could return to drive further earnings growth. We believe maintaining a balanced portfolio exposure between dividend growth stocks and high-dividend-yielding stocks makes more sense in the current environment.

Rolling 12 Month Returns For the period ended 30/06/2021 - I (Acc)
Name 2021 2020 2019 2018 2017 Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
50.65% 14.11% 1.70% 18.38% 23.33% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
40.03% 1.97% -0.18% 10.21% 27.06%
Matthews Asia ex Japan Dividend Fund (GBP)
33.36% 18.00% 5.43% 16.83% 27.51% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
25.25% 5.03% 3.55% 8.43% 30.76%

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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