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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

7.11%

YTD Return (USD)

(as of 27/01/2021)

$26.22

Price (USD)

(as of 27/01/2021)

$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
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As of 31/12/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
9.87% 21.13% 51.86% 51.86% 15.81% 19.58% n.a. 19.25% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
6.84% 18.66% 25.36% 25.36% 8.46% 13.90% n.a. 13.56%
Matthews Asia ex Japan Dividend Fund (GBP)
7.13% 13.70% 46.62% 46.62% 15.42% 21.54% n.a. 21.48% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
4.35% 12.23% 21.49% 21.49% 8.09% 15.63% n.a. 15.74%
As of 31/12/2020
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
9.87% 21.13% 51.86% 51.86% 15.81% 19.58% n.a. 19.25% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
6.84% 18.66% 25.36% 25.36% 8.46% 13.90% n.a. 13.56%
Matthews Asia ex Japan Dividend Fund (GBP)
7.13% 13.70% 46.62% 46.62% 15.42% 21.54% n.a. 21.48% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
4.35% 12.23% 21.49% 21.49% 8.09% 15.63% n.a. 15.74%
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 31/12/2020
Name 2020 2019 2018 2017 2016 Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
51.86% 16.73% -12.37% 47.29% 6.89% 30/11/2015
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% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
21.49% 13.94% -8.78% 29.78% 26.15%

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)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 5.7
Tencent Holdings, Ltd. Communication Services China/Hong Kong 4.6
Samsung Electronics Co., Ltd. Information Technology South Korea 3.4
Leader Harmonious Drive Systems Co., Ltd. Industrials China/Hong Kong 3.1
LG Chem Ltd. Materials South Korea 3.1
AIA Group, Ltd. Financials China/Hong Kong 2.9
MR DIY Group M BHD Consumer Discretionary Malaysia 2.2
SITC International Holdings Co., Ltd. Industrials China/Hong Kong 2.1
Postal Savings Bank Of China Co., Ltd. Financials China/Hong Kong 2.1
Wuliangye Yibin Co., Ltd. Consumer Staples China/Hong Kong 2.0
TOTAL 31.2

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 31/12/2020)
  • Sector Allocation
  • Country Allocation
  • Asset Type Breakdown
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 19.6 23.1 -3.5
Industrials 17.3 5.3 12.0
Consumer Discretionary 16.4 19.1 -2.7
Financials 14.1 17.9 -3.8
Communication Services 12.2 11.5 0.7
Health Care 6.0 5.0 1.0
Real Estate 5.7 3.9 1.8
Consumer Staples 3.4 5.0 -1.6
Materials 3.1 4.3 -1.2
Energy 1.4 2.8 -1.4
Utilities 0.0 2.2 -2.2
Cash and Other Assets, Less Liabilities 0.8 0.0 0.8

Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.

Country Fund Benchmark Difference
China/Hong Kong 48.1 51.6 -3.5
South Korea 17.9 15.2 2.7
Taiwan 12.1 14.2 -2.1
Singapore 6.4 2.4 4.0
India 4.6 10.4 -5.8
Malaysia 2.4 1.7 0.7
Vietnam 1.9 0.0 1.9
Thailand 1.8 2.1 -0.3
Indonesia 1.8 1.5 0.3
Philippines 1.1 0.8 0.3
United States 0.9 0.0 0.9
Cash and Other Assets, Less Liabilities 0.8 0.0 0.8

Not all countries are included in the benchmark index(es).

Asset Type Fund
Common Equities and ADRs 97.4
Preferred Equities 1.8
Cash and Other Assets, Less Liabilities 0.8
Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 38.5 64.0 -25.5
Large Cap ($10B-$25B) 11.9 19.7 -7.8
Mid Cap ($3B-$10B) 19.3 14.9 4.4
Small Cap (under $3B) 29.6 1.5 28.1
Cash and Other Assets, Less Liabilities 0.8 0.0 0.8

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 22/01/2021)

Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.

Overall Morningstar RatingTM is reflective of the 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 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 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, 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, the 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)
Name 2020 2019 2018 2017 2016 Inception Date
Matthews Asia ex Japan Dividend Fund (USD)
51.86% 16.73% -12.37% 47.29% 6.89% 30/11/2015
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% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
21.49% 13.94% -8.78% 29.78% 26.15%

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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