Snapshot
- Total return strategy seeks to access the growth of China with lower volatility
- Unconstrained all-cap portfolio with a quality bias
- Flexible approach offers participation in both growth and value markets
31/01/2013
Inception Date
11.06%
YTD Return (USD)
(as of 24/06/2021)
$24.60
Price (USD)
(as of 24/06/2021)
$21.34 million
Fund Assets
(as of 31/05/2021)
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 assets, in income-paying publicly traded common stocks, preferred stocks, convertible preferred stocks, and other equity-related instruments of companies located in China. For purpose of this policy, China includes the People's Republic of China, its administrative and other districts, such as Hong Kong, as well as Taiwan. The Fund may also invest in convertible fixed-income securities.
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 currency, 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. Investments in a single-country fund may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.
The risks associated with investing in the Fund can be found in the prospectus.
Fund Facts
| Inception Date | 31/01/2013 | |
| Fund Assets | $21.34 million (31/05/2021) | |
| Base Currency | USD | |
| ISIN: | LU0871673488 (USD) | |
| Bloomberg Symbol | MATACDI:LX (USD) | |
| Benchmark | MSCI China Index | |
| Geographic Focus | China and Taiwan: China includes its administrative and other districts, such as Hong Kong | |
Fees & Expenses
| Management Fee | 0.75% | |
| Total Expense Ratio As of 31/03/2021 | 1.11% ( USD ) | |
Performance
- Monthly
- Quarterly
- Calendar Year
- Rolling 12 Month
Returns
As of 31/05/2021
As of 31/03/2021
For the years ended December 31st
For the period ended 31/03/2021
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 31/05/2021)
2.45%
Dividend Yield
Source: FactSet Research Systems, Bloomberg, Matthews
Portfolio Characteristics
(as of 31/05/2021)48
Number of Securities
Source: Brown Brothers Harriman (Luxembourg) S.C.A
13.8x
P/E using FY1 estimates
12.1x
P/E using FY2 estimates
$87.3 billion
Weighted Average Market Cap
Source: FactSet Research Systems
Top 10 Holdings
(as of 31/05/2021)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 31/05/2021)- Sector Allocation
- Asset Type Breakdown
- Market Cap Exposure
- China Exposure
Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.
Source: FactSet Research Systems unless otherwise noted.
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 31/05/2021)
CATEGORY: China Equity
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
Sherwood Zhang, CFA
Lead 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.
Yu Zhang, CFA
Co-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
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.
Latest China 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 March 2021
For the quarter ending 31 March 2021, the Matthews China Dividend Fund returned 0.77%, while its benchmark, the MSCI China Index, returned -0.43%.
Market Environment:
Chinese equity markets were volatile during the first quarter. While stock prices rose early in the quarter, broad-market gains in the benchmarks were erased by quarter end. Firstly, the Chinese central bank started to tighten mortgage regulations in certain regions where real estate price have gone up too fast, and also began examining small business loans that have been misused for property speculation. The hope for a global recovery also started to turn to worry with the possibility of an early ending of global monetary loosening, given the sharp increase of U.S. Treasury yield.
On the geopolitical front, the first high level meeting of senior diplomats from the new Biden administration and their Chinese counterparts turned into a public quarrel. And investors were reminded that U.S. securities regulators will enact to delist Chinese companies that do not comply with American auditing standards for three years in a row. The Hong Kong market was also spooked by the news that the Hong Kong government will raise the stamp duty tax on shares traded on Hong Kong stock exchanges to raise fiscal revenue. Finally, on the last few trading days of the quarter, news broke that a mysterious family office in New York which heavily invested in many Chinese companies went bust, and its prime brokers were liquidating some of those shares in rapid fire sale. This further dampened market sentiment, especially for the high-flying Chinese growth stocks.
Performance Contributors and Detractors:
SITC International, a leading intra-region container shipping company was a contributor in the quarter. The strong performance was due to stronger-than-expected annual results announced in early March. Baioo Family Interactive, a mobile game developer, was also a notable contributor. Baioo announced in February that Tencent Holdings, the leading game publisher in China, made a minority investment in the company. Markets welcomed this news, viewing it as an endorsement on Baioo’s quality that suggests future cooperation.
On the other hand, XD Inc., another mobile game developer, was a detractor. XD has heavily invested in its mobile gamer community platform, thus the loss in that segment in 2020 surprised the market. We believe the gamer community is a unique asset for XD, which allows gamers and game publishers to by-pass the commission taken by middle men and app stores. Minth Group was another detractor as the stock was negatively impacted by the news that the separate listing of its battery-hosting business could be cancelled due to regulation changes. However, we believe this does not impact the company’s business fundamentals.
Notable Portfolio Changes:
During the quarter, we initiated a position in Haier Smart Home listed in Germany’s stock exchange at a significant discount to the company’s A and H shares listed in Shanghai and Hong Kong. Haier Smart Home mainly engages in the research, development, production and sales of smart home appliances and we like the company’s diverse market exposure, especially its significant presence in the U.S. market. We believe Haier could be taking market share with its own manufacturing capacity acquired from General Electronics a few years ago. In addition, we have initiated position in two consumer staples stocks, Uni-President China Holdings which manufactures beverages and instant noodles and Jiajiayue Group, a super market chain operator. Uni-President China’s beverage sales were negatively impacted last year due to restricted travelling and outdoor activities due to COVID but we believe its sales should recover this year. We also think the company’s growth in self-heating rice category will supplement its slow growing instant noodle business over the longer term. Jiajiayue Group and other super market retailers’ shares were significantly de-rated by the market due to concerns of competition from community-based group buying apps. However, we believe Jiajiayue, with its efficient supply chain and comprehensive offering such as cooked meals, is well poised to compete and survive in this challenging market.
We have taken profit and exited our positions from Gree Electric Appliances, China International Capital Corporation, Accton Technology and JD Health International, and deploy capital somewhere else.
Outlook:
We remain optimistic about both the near-term and long-term growth prospects in China. In the near term, Chinese equities market and its economy may decouple as Chinese equities have run ahead of fundamentals with ample global liquidity. Keeping the coronavirus under control is key to maintaining China’s V-shaped economic recovery. While the global economy starts to recover with the help of COVID vaccines and interest rates begin to normalize, Chinese equities may correct from high growth expectation and present good opportunities for long-term investors.
Over the long term, we expect that China’s growth will continue to be driven by growing domestic consumption. The depth and diversity of the opportunity set in China continues to expand, with a notable uptick in IPOs over the past 12 months. Key themes that we are following include technology upgrades, health and wellness trends, services that enhance quality of life and premium consumer goods. The team continues to look for attractive long-term growth opportunities driven by the Chinese consumer.
Rolling 12 Month Returns For the period ended 31/03/2021 - I (Acc)
Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg