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Matthews Asia Innovative Growth Fund

Snapshot
  • High-conviction, concentrated equity portfolio of innovative companies in Asia
  • All-cap fundamental approach focused on companies with unique offerings that create or expand markets
  • Capitalizing on the new economy and the rising disposable income in Asia

23/03/2021

Inception Date

15.37%

YTD Return (USD)

(as of 24/06/2024)

$7.28

NAV (USD)

(as of 24/06/2024)

-0.03

1 Day NAV Change

(as of 24/06/2024)

Objective

Long-term capital appreciation.

Sustainability

The Fund promotes environmental and social characteristics according to Article 8 of SFDR. Furthermore, the Fund uses both activity- and norm-based exclusions. Information relating to the environmental and social characteristics of this Fund is available in the prospectus.

Strategy

The Fund seeks to achieve its investment objective by investing, directly or indirectly, at least 65% of its total net assets in companies Asia ex Japan that Matthews Asia believes are capable of growth based on innovation, which could be innovation in products or services or in other areas, such as processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets.

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.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 23/03/2021
Fund Assets $15.82 million (31/05/2024)
Base Currency USD
ISIN: LU2298459939 (USD) LU2298460192 (GBP)
Bloomberg Symbol MAIGIUA:LX (USD) MAIGIAG:LX (GBP)
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia Ex Japan: Consists of all countries and markets in Asia, excluding Japan but including all developed, emerging and frontier countries and markets in Asia
SFDR Classification Article 8
Fees & Expenses
Management Fee 0.75%
Total Expense Ratio 0.90% ( USD ) 0.90% ( GBP )

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
    Returns
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As of 31/05/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovative Growth Fund (USD)
0.73% 4.08% 9.03% 12.05% -12.42% n.a. n.a. -11.07% 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
1.58% 5.51% 5.37% 11.63% -6.79% n.a. n.a. -5.60%
Matthews Asia Innovative Growth Fund (GBP)
-0.80% 3.47% 9.06% 8.75% -9.21% n.a. n.a. -8.78% 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
-0.10% 4.83% 5.50% 8.67% -3.30% n.a. n.a. -3.20%
As of 31/03/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovative Growth Fund (USD)
2.12% 6.97% 6.97% 2.12% -11.66% n.a. n.a. -12.20% 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
2.58% 2.44% 2.44% 4.36% -6.52% n.a. n.a. -6.77%
Matthews Asia Innovative Growth Fund (GBP)
2.22% 7.75% 7.75% 0.00% -9.09% n.a. n.a. -9.61% 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
2.72% 3.38% 3.38% 2.15% -3.73% n.a. n.a. -4.03%
For the years ended December 31st
Name 2023 2022 2021 2020 2019
Matthews Asia Innovative Growth Fund (USD)
-2.62% -24.74% n.a. n.a. n.a.
MSCI All Country Asia ex Japan Index (USD)
6.34% -19.36% n.a. n.a. n.a.
Matthews Asia Innovative Growth Fund (GBP)
-7.94% -15.66% n.a. n.a. n.a.
MSCI All Country Asia ex Japan Index (GBP)
0.34% -9.19% n.a. n.a. n.a.
For the period ended 31/03/2024
Name 2024 2023 2022 2021 2020 Inception Date
Matthews Asia Innovative Growth Fund (USD)
2.12% -6.51% -27.78% n.a. n.a. 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
4.36% -8.54% -14.42% n.a. n.a.
Matthews Asia Innovative Growth Fund (GBP)
0.00% -0.94% -24.16% n.a. n.a. 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
2.15% -2.61% -10.32% n.a. n.a.

Source: Brown Brothers Harriman (Luxembourg) S.C.A.

All returns over 1 year are annualized

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.

Portfolio Characteristics

(as of 31/05/2024)
Fund Benchmark
Number of Positions 57 1,180
Weighted Average Market Cap $160.0 billion $144.9 billion
Active Share 64.5 n.a.
P/E using FY1 estimates 18.1x 13.2x
P/E using FY2 estimates 14.5x 11.5x
Price/Cash Flow 14.8 8.5
Price/Book 3.3 1.7
Return On Equity 17.2 14.8
EPS Growth (3 Yr) 18.7% 13.4%

Sources: Factset Research Systems, Inc.

Top 10 Holdings

(as of 31/05/2024)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 9.7
Tencent Holdings, Ltd. Communication Services China/Hong Kong 5.2
PDD Holdings, Inc. Consumer Discretionary China/Hong Kong 4.9
Samsung Electronics Co., Ltd. Information Technology South Korea 4.8
Sea, Ltd. Communication Services Singapore 4.2
Zomato, Ltd. Consumer Discretionary India 3.5
SK Hynix, Inc. Information Technology South Korea 3.3
Trip.com Group, Ltd. Consumer Discretionary China/Hong Kong 3.1
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 2.8
KE Holdings, Inc. Real Estate China/Hong Kong 2.6
TOTAL 44.1

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 31/05/2024)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 37.6 26.4 11.2
Consumer Discretionary 22.8 13.9 8.9
Communication Services 12.3 9.6 2.7
Industrials 10.9 7.7 3.2
Financials 5.5 20.7 -15.2
Real Estate 2.6 2.6 0.0
Health Care 2.3 3.2 -0.9
Energy 2.1 4.0 -1.9
Materials 0.0 4.7 -4.7
Consumer Staples 0.0 4.3 -4.3
Utilities 0.0 2.9 -2.9
Cash and Other Assets, Less Liabilities 3.9 0.0 3.9

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 35.5 36.0 -0.5
Taiwan 19.6 20.5 -0.9
India 18.2 20.7 -2.5
South Korea 12.1 13.2 -1.1
Singapore 4.7 3.7 1.0
Japan 3.3 0.0 3.3
Netherlands 1.1 0.0 1.1
Brazil 1.0 0.0 1.0
Vietnam 0.7 0.0 0.7
Indonesia 0.0 1.8 -1.8
Thailand 0.0 1.7 -1.7
Malaysia 0.0 1.6 -1.6
Philippines 0.0 0.6 -0.6
Macau 0.0 0.2 -0.2
Cash and Other Assets, Less Liabilities 3.9 0.0 3.9

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 68.6 61.8 6.8
Large Cap ($10B-$25B) 12.2 20.1 -7.9
Mid Cap ($3B-$10B) 11.1 17.2 -6.1
Small Cap (under $3B) 4.2 0.9 3.3
Cash and Other Assets, Less Liabilities 3.9 0.0 3.9

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.

ESG Characteristics

(as of 31/03/2024)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 99% Benchmark Coverage: 100%
0.0 0.5 -0.5
Tobacco
Fund Coverage: 99% Benchmark Coverage: 100%
0.0 0.4 -0.4
Name Fund Benchmark Difference
UN Global Compact Violators
Fund Coverage: 100% Benchmark Coverage: 100%
0.0 0.8 -0.8
Board Diversity
Fund Coverage: 100% Benchmark Coverage: 100%
21.3 18.1 3.2

Board Diversity: Represents the weighted average ratio of female board members in investee companies.
Tobacco: Represents companies that generate more than 5% of revenue from tobacco manufacturing exposure to or production or that generate more than 50% of revenue from tobacco retail. 
UN Global Compact Violators: Represents companies that have been assessed as failing to comply with the 10 United Nations Global Compact Principles by ISS-ESG Norms-Based Research. Different ESG research providers may come to different conclusions on the severity of the violation.
Controversial weapons include companies with involvement in the following: anti-personnel mines; biological and chemical weapons; cluster weapons; depleted uranium; nuclear weapons and white phosphorus. A company is excluded if it is directly involved in the production, selling and/or distribution of (parts of) controversial weapons and this involvement concerns the core weapon system, or components/services of the core weapon system that are tailor-made and essential for the lethal use of the weapon.

Source: Sustainalytics, Factset, MSCI, Matthews Asia.

GHG Intensity

(as of 31/03/2024)

Fund Coverage: 100%; Benchmark Coverage: 99% as of 31/03/2024

GHG Intensity: Represents the normalized portfolio’s total weighted average (scope 1 + scope 2) carbon emissions intensity, using the most recently available data (emissions data from 2020, 2021). Carbon intensity represents the issuer’s total carbon emissions per EUR million of revenue (tCO2e divided by EUR million in revenue).

Source: Sourced from ISS ESG. Where not covered by external data providers, we have tried to source these data points.

Sustainability-related Disclosures

This Fund Yes No
Complies with Article 8 of SFDR  
Investment process integrates ESG factors and sustainability risks based on proprietary and third-party research  
Applies norms- and activity-based exclusions  
Promotes environmental and social characteristics  
Has a sustainable investment objective  
Conducts engagement  
Exercises Voting Rights  

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 Fund’s investment objective and risk factors.

For more information, please refer to our Responsible Investment and Stewardship Policy and our ESG-Related Investment Policy of Matthews Asia Funds.

Portfolio Managers

Michael J. Oh, CFA photo
Michael J. Oh, CFA

Lead Manager

Inbok  Song photo
Inbok Song

Co-Manager

Commentary

Period ended 31 March 2024

Environment

  • The first quarter of the year was a period of contrast across markets in Asia. In particular, markets linked to technology, communication services and the global supply chains of semiconductors and artificial intelligence benefited while other interest-rate sensitive areas were held back by a reset in expectations as to the trajectory of U.S. Federal Reserve cuts. In terms of markets, Taiwan and India were the strongest performing markets while China/Hong Kong struggled. 
  • India outperformed the broad emerging markets though there was some consolidation over concerns regarding elevated valuations. Unique characteristics underpinning India’s elevated valuations include having one of the world’s highest nominal GDP growth rates supported by higher-than-market earnings growth and a long runway of powerful demographics and wage growth.
  • Taiwan did well thanks to its exposure to global supply chains in technology. Its strong ties to the rapidly growing contribution of generative artificial intelligence (AI) to economies and world trade helped.
  • Chinese stocks were volatile in the first quarter but rebounded from January’s sell-off as investors weighed positive statements from the Chinese government regarding its 5% GDP growth target, efforts to underpin the local stock markets via ETF purchases and green-shoots of improvement in corporate earnings revisions. Nevertheless, the market still ended the period in negative territory.

Contributors and Detractors

  • For the quarter ended March 31, 2024, the Asia Innovative Growth Fund returned 6.97%, (I Acc USD) while its benchmark, the MSCI All Country Asia ex Japan Index, returned 2.44% over the same period.
  • The top three contributors to relative performance, on a country basis, were United States due to an off-benchmark allocation, and India and China/Hong Kong due to stock selection. The top three detractors to relative performance were Taiwan and South Korea due to an underweight allocation and the Philippines due to zero allocation.
  • The top three contributors to relative performance, on a sector basis, were information technology and consumer discretionary due to stock selection and materials due to an underweight allocation. The top three detractors to relative performance were energy and utilities due to an underweight allocation and industrials due to stock selection.
  • The largest contributors to absolute performance during the quarter included NVIDIA, a U.S. specialist semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company, a leading Taiwanese semiconductor manufacturer, and Zomato, a leading Indian online restaurant booking and food delivery company. The top three detractors to performance included Pinduoduo (PDD), one of China’s largest e-commerce platforms that started its businesses with a focus on lower-tier city, price sensitive consumers, Alibaba Group, the largest e-commerce platform company in China, and NAVER, a South Korean internet conglomerate company.

Outlook

  • As we look out to the rest of the year, we see three reasons to be positive on markets in Asia. The first is the natural recovery that is taking hold after COVID. Economic growth is picking up and is being driven by domestic consumption. Secondly, when interest rates are cut in the U.S., we should see a cyclical pickup, particularly in markets like South Korea and Taiwan. Thirdly, we expect the second half of the year to yield slightly better news for China. We think earnings will continue to improve and there will be more initiatives to support the consumer.
  • The ascendence of AI across all economic activity and industries across the globe, we believe, will continue to be a growth driver for computer hardware, chip and equipment makers in Taiwan and across other markets in the region including South Korea and China.

 

Rolling 12 Month Returns For the period ended 31/03/2024 - I (Acc)
Name 2024 2023 2022 2021 2020 Inception Date
Matthews Asia Innovative Growth Fund (USD)
2.12% -6.51% -27.78% N.A. N.A. 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
4.36% -8.54% -14.42% N.A. N.A.
Matthews Asia Innovative Growth Fund (GBP)
0.00% -0.94% -24.16% N.A. N.A. 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
2.15% -2.61% -10.32% N.A. N.A.

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg

To find documents in additional languages, please visit the Fund Literature page in our Resources section.

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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