- 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
11.42%
YTD Return (USD)
(as of 03/02/2023)
$7.22
NAV (USD)
(as of 03/02/2023)
-0.10
1 Day NAV Change
(as of 03/02/2023)
Objective
Long-term capital appreciation
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 | $30.42 million (31/12/2022) | |
| 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 | |
Fees & Expenses
| Management Fee | 0.75% | |
| Total Expense Ratio As of 31/03/2022 | 0.90% ( USD ) 0.90% ( GBP ) | |
| Objective | Long-term capital appreciation |
| 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.
The risks associated with investing in the Fund can be found in the prospectus |
Performance
- Monthly
- Quarterly
- Calendar Year
- Rolling 12 Month
Returns
As of 31/12/2022
As of 31/12/2022
For the years ended December 31st
For the period ended 31/12/2022
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.
Portfolio Characteristics
(as of 31/12/2022)Sources: Factset Research Systems, Inc.
Top 10 Holdings
(as of 31/12/2022)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 31/12/2022)- Sector Allocation
- Country Allocation
- 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).
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.
Portfolio Managers
Michael J. Oh, CFA
Lead Manager
Michael J. Oh, CFA
Portfolio Manager
Michael Oh is a Portfolio Manager at Matthews Asia and manages the firm’s Asia Innovators and Korea Strategies and co-manages the Asia Growth Strategy. Michael joined Matthews Asia in 2000 and has built his investment career at the firm. Michael was promoted from Research Analyst to Assistant Portfolio Manager in 2003. In 2006 and 2007, he was promoted to Lead Manager of the Matthews Asia Innovators Strategy and the Matthews Korea Strategy, respectively. From 2000-2003, Michael’s research focused on the technology sector supporting multiple strategies managed by the founders of the firm. As a research analyst, he contributed investment ideas to the broader Matthews Asia investment teams. Michael received a B.A. in Political Economy of Industrial Societies from the University of California, Berkeley. He is fluent in Korean.
Taizo Ishida
Co-Manager
Taizo Ishida
Portfolio Manager
Taizo Ishida is a Portfolio Manager at Matthews Asia and manages the firm’s Asia Growth and Japan Strategies, and co-manages the firm’s Asia Innovators Strategy. Prior to joining Matthews Asia in 2006, Taizo spent six years on the global and international teams at Wellington Management Company as a Vice President and Portfolio Manager. From 1997 to 2000, he was a Senior Securities Analyst and a member of the international investment team at USAA Investment Management Company. From 1990 to 1997, he was a Principal and Senior Research Analyst at Sanford Bernstein & Co. Prior to beginning his investment career at Yamaichi International (America), Inc. as a Research Analyst, he spent two years in Dhaka, Bangladesh as a Program Officer with the United Nations Development Program. Taizo received a B.A. in Social Science from International Christian University in Tokyo and an M.A. in International Relations from The City College of New York. He is fluent in Japanese.
To find documents in additional languages, please visit the Fund Literature page in our Resources section.
Related 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 MSCI China A Onshore Index captures large and mid cap representation across China securities listed on the Shanghai and Shenzhen exchanges. Index is for comparative purposes only and it is not possible to invest directly in an index.
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 30 September 2022
For the quarter ending 30 September 2022, the Matthews Asia Innovative Growth Fund returned -13.79%, while its benchmark, the MSCI All Country Asia ex Japan Index, returned -13.69%.
Market Environment:
The third quarter was again a challenging period for emerging and Asian equity markets. Elevated inflation data continued and diminishing consumer spending in many regions dampened global sentiment and continued to spark recessionary fears. While Asian equity markets endured the choppy waters relatively better in the second quarter, experiencing less downside than commodity heavy, weak-performing EMEA (Europe, Middle East, Africa) and LatAm regions, most of the gains were lost during the third quarter. In particular, Chinese equities saw a sharp downturn amid spillover of China’s real estate woes into its broader economy and lingering COVID restrictions. In addition, both South Korean and Taiwan markets were weak which were concentrated in September. India continues to be among the few bright spots in Asia and Southeast Asian countries such as Indonesia and the Philippines also performed relatively better than North Asia, while Vietnam, which has held up quite well in the past 12-month period, experienced a sharp downturn.
Performance Contributors and Detractors:
From a regional perspective, the Fund’s overweight and stock selection within China/Hong Kong detracted the most from the portfolio’s absolute and relative performance for the quarter. China/Hong Kong companies suffered from China’s ongoing zero-COVID policy and weakening property markets leading to poor consumer sentiment. On the other hand, the Fund’s overweight and stock selection within India contributed the most to Fund performance. India continues to be a bright spot in this tough market environment and the Fund continues to maintain a significant overweight position relative to the benchmark. India companies in general has been relatively stable and relatively unharmed by regulatory issues elsewhere in the region. India has also been relatively free from the political dispute between China and the U.S. However, valuations in some segments of the Indian market are stretched so we will continue to monitor the market closely. From a sector perspective, our stock selection within financials and information technology contributed the most to relative performance while our overweight and stock selection within consumer discretionary detracted the most from relative performance.
Turning to individual securities, Indian financial holdings were the best performers during the quarter. ICICI Bank and Bajaj Finance were top two contributors. The private banking sector in India continued its strong growth and recovery from COVID, and valuations remain relatively attractive despite strong performance year to date. Bank Mandiri in Indonesia also performed well during the quarter. Banks are expected to benefit as central banks around the world continue to hike interest rates following the path of the U.S. Federal Reserve to fight off inflation.
On the other hand, Chinese electric vehicle (EV) maker Xpeng was the biggest detractor during the quarter. While the Chinese EV industry continued to expand as expected, market competition has also increased as more companies entered the space. Xpeng is also in between model cycles, temporary slowing its sales growth. We expect the competition to increase in this space going forward and we are evaluating our approach and exposure in China’s electrics vehicles. China’s largest e-commerce platform Alibaba Group and leading Chinese e-commerce player JD.com also detracted during the quarter. Slowing topline growth mostly due to on-going zero-COVID policy hurt e-commerce companies in China. However, we are seeing positive profit growth and improving margin trends, positioning both companies well to recover once China moves on from its zero-COVID policy.
Notable Portfolio Changes:
During the third quarter, we reinitiated a position in India’s online food delivery platform Zomato given its current valuation. Zomato continues to be a leader in the food delivery vertical and its services are expanding beyond its primary first tier cities. We have also initiated a position in Samsung SDI, a South Korean battery and electronic materials manufacturer, to increase our exposure to the overall EV industry. Samsung SDI is one of the biggest players in the battery space, supplying units for many major automobile manufacturers.
During the quarter we also exited a few positions including two Chinese stocks. We excited East Money Information, an online financial services platform company, as it is facing new regulations to cut fees in the industry. We also exited China Resources Mixc Lifestyle, a property management company, to reduce our exposure to China’s real estate market in general.
Outlook:
Looking ahead, several challenges remain. The biggest challenge is the on-going zero-COVID policy in China which is likely to hurt market and consumer sentiment in China and hamper a recovery. Another big challenge in the markets is elevated inflation and the U.S. Fed’s aggressive monetary policy. That said, we believe that markets have priced in a substantial amount of uncertainty, especially within Asia and China, and not withstanding a sudden and severe downturn of global economic activity or a geopolitical shift, we believe there may be upside to come if we see some meaningful changes in China’s zero-COVID policy and a shift in monetary policy. The current valuation level in China reflects the level reached during the global financial crisis and we believe that the current valuation is very attractive.
We continue to find many innovative companies in Asia at appealing levels today and the current levels continue to provide fertile hunting ground for companies that are innovating in areas such as business strategy, products and services, marketing and human capital.
Rolling 12 Month Returns For the period ended 31/12/2022 - I (Acc)
Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg