A focus on Asia—and providing compelling investment solutions for our clients—is what we believe distinguishes us among investment managers. Our insights into investment opportunities and risks are backed by proprietary research, a collaborative culture and 30 years of experience.
23/03/2021
Inception Date
-3.24%
YTD Return (USD)
(as of 30/05/2023)
$6.27
NAV (USD)
(as of 30/05/2023)
+0.08
1 Day NAV Change
(as of 30/05/2023)
Long-term capital appreciation
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.
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.
| Inception Date | 23/03/2021 | |
| Fund Assets | $31.69 million (30/04/2023) | |
| 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 | |
| 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 |
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.
Sources: Factset Research Systems, Inc.
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
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.
Lead Manager
Portfolio Manager
Michael Oh is a Portfolio Manager at Matthews and manages the firm’s Asia Innovators and Korea Strategies and co-manages the Asia Growth Strategy. Michael joined Matthews 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 investment teams. Michael received a B.A. in Political Economy of Industrial Societies from the University of California, Berkeley. He is fluent in Korean.
Co-Manager
Portfolio Manager
Taizo Ishida is a Portfolio Manager at Matthews and manages the firm’s Asia Growth and Japan Strategies, and co-manages the firm’s Asia Innovators Strategy. Prior to joining Matthews 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.
Co-Manager
Portfolio Manager
Inbok Song is a Portfolio Manager at Matthews and manages the firm’s Pacific Tiger Strategy and co-manages the Asia ex Japan Total Return Equity, Emerging Markets Sustainable Future and Asia Innovators Strategies. Prior to rejoining Matthews in 2019, Inbok spent three years at Seafarer Capital Partners as a portfolio manager, the firm’s Director of Research and chief data scientist. Previously she was at Thornburg Investment Management as an associate portfolio manager. From 2007 to 2015, she was at Matthews, most recently as a portfolio manager. From 2005 to 2006, Inbok served as an Analyst and Technology Specialist at T. Stone Corp., a private equity firm in Seoul, South Korea. From 2004 to 2005, she was a research engineer for Samsung SDI in Seoul. Inbok received both a B.A. and Masters in Materials Science and Engineering from Seoul National University. She received a Masters in International Management from the University of London, King’s College, and also an M.A. in Management Science and Engineering, with a concentration in finance from Stanford University. Inbok is fluent in Korean.
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.
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 31 March 2023
For the quarter ending 31 March 2023, the Matthews Asia Innovative Growth Fund returned 2.01%, while its benchmark, the MSCI All Country Asia ex Japan Index, returned 4.39%.
Market Environment:
Markets were seemingly disappointed in the first quarter as China’s economy didn’t take off as quickly as expected following the abandonment of its zero-COVID policy. While we still anticipate a normalization of economic activity, Chinese consumers have taken a conservative approach to resuming their standard spending patterns and that has weighed on overall sentiment and dampened investor enthusiasm. However, we expect that as companies report better earnings versus last year over the coming quarters, markets will continue recovering.
South Korea and Taiwan had relatively robust first quarters as their closer economic ties with the U.S.—which was surprisingly resilient in the period—helped bolster economic activity and, with it, markets. Elsewhere, India’s market declined as it consolidated some of its meaningful 2022 gains. In our view, valuations there remain quite high relative to other areas, which also weighed on the market.
Performance Contributors and Detractors:
Regionally, our stock selection in China and Hong Kong was the biggest detractor to relative performance—with the latter impacted given its close economic and market ties to China. However, we maintain our conviction in our overweight exposure to China as we believe valuations remain compelling and that the post-COVID recovery, already underway, will continue. Our underweight to Taiwan also detracted from relative results as Taiwanese semiconductor companies in particular had a good quarter. Conversely, relative strength in stock selection was concentrated among our Singapore holdings. At the sector level, our consumer discretionary overweight and stock selection were the biggest detractors given ongoing weakness among consumers. On the other hand, our real estate holdings were a relative tailwind as the sector seems to have bottomed and begun recovering from concerns in 2022 about a potential property bubble in China.
At the individual holdings level, JD.com and Kuaishou Technology were among the bottom contributors. Chinese e-commerce platform JD.com continues to face stiff competition. It’s announced a roughly $1 billion subsidy program for its merchants seemingly disappointed investors as it will likely weigh on margins moving forward. Shares of Chinese streaming and online marketing platform Kuaishou Technology declined as investors consolidated gains following the stock’s rally since October. Conversely, Sea and KE Holdings were among the top individual contributors. Singapore-based e-commerce platform Sea reached profitability sooner than expected as it decided to exit some unprofitable markets—developments which were well-received by the market. We maintain a sizeable position in our portfolio as we believe Sea is well-positioned to continue improving profitability this year. Chinese online/offline real estate services provider KE Holdings performed well on the back of expectations China’s real estate market has bottomed and will improve from here.
Notable Portfolio Changes:
We increased our exposure to Samsung Electronics in the first quarter as its valuation is attractive—particularly against what we believe to be a cyclical bottom in the DRAM industry. Samsung is one of the dominant DRAM manufacturers, and we see the current short supply contributing to an improved overall pricing environment, which should in turn boost shares in the period ahead.
We also pared our exposure to Indian banks—including ICICI Bank and IndusInd Bank—as valuations have approached what we believe to be fair levels following solid 2022 performance. We continue to like Indian banks, though, and when valuations seem more attractive, we would consider increasing our exposure again.
Outlook:
Though sentiment was negative in the first quarter—particularly in China—we believe it is improving. However, consumers still remain cautious as the effects of pandemic lockdowns will take some time to reverse. We consequently expect a gradual recovery in China though we continue seeing improvements across most industries. Anecdotally, our analysts on the ground are reporting that restaurants are full, travel is picking up and China’s government is allowing some group tours to more foreign countries. We ultimately expect a full normalization of travel and that countries will see as many Chinese tourists as—if not more than—before the pandemic.
We maintain our enthusiasm on China’s outlook, especially given valuations which reflect a slower-than-anticipated reopening story. Also contributing to our enthusiasm is our belief that the technology cycle (particularly for semiconductors) is likely to bottom in 2023’s first half and rebound in the second half—which should further contribute to positive sentiment improvements.
All that said, we expect China’s relationship with the U.S. to remain fragile moving forward—which we will diligently monitor in the period ahead. Outside of China, we remain cautious on the outlook for India as valuations are still relatively elevated and the backdrop seems to have largely stagnated.
Rolling 12 Month Returns For the period ended 31/03/2023 - I (Acc)
Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg