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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

19.65%

YTD Return (USD)

(as of 02/12/2024)

$7.55

NAV (USD)

(as of 02/12/2024)

+0.03

1 Day NAV Change

(as of 02/12/2024)

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 $17.11 million (31/10/2024)
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 31/10/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovative Growth Fund (USD)
-3.36% 5.66% 18.38% 29.46% -8.15% n.a. n.a. -7.77% 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
-4.46% 5.68% 16.10% 28.58% -0.99% n.a. n.a. -2.38%
Matthews Asia Innovative Growth Fund (GBP)
-0.25% 4.47% 16.08% 21.41% -6.26% n.a. n.a. -6.20% 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
-0.32% 5.58% 15.12% 21.36% 1.15% n.a. n.a. -0.46%
As of 30/09/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovative Growth Fund (USD)
8.26% 5.75% 22.50% 29.26% -5.77% n.a. n.a. -7.05% 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
8.47% 10.55% 21.52% 29.39% 0.98% n.a. n.a. -1.16%
Matthews Asia Innovative Growth Fund (GBP)
6.56% -0.25% 16.37% 18.28% -5.66% n.a. n.a. -6.27% 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
6.28% 4.18% 15.49% 17.74% 1.16% n.a. n.a. -0.38%
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 30/09/2024
Name 2024 2023 2022 2021 2020 Inception Date
Matthews Asia Innovative Growth Fund (USD)
29.26% 0.67% -35.71% n.a. n.a. 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
29.39% 11.28% -28.48% n.a. n.a.
Matthews Asia Innovative Growth Fund (GBP)
18.28% -9.42% -21.62% n.a. n.a. 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
17.74% 1.78% -13.61% 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 31/10/2024)
Fund Benchmark
Number of Positions 49 1,071
Weighted Average Market Cap $169.5 billion $176.3 billion
Active Share 67.5 n.a.
P/E using FY1 estimates 18.4x 13.7x
P/E using FY2 estimates 15.5x 12.4x
Price/Cash Flow 16.5 9.3
Price/Book 3.2 1.8
Return On Equity 13.3 15.1
EPS Growth (3 Yr) 17.3% 12.9%

Sources: Factset Research Systems, Inc.

Top 10 Holdings

(as of 31/10/2024)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 9.5
Sea, Ltd. Communication Services Singapore 6.1
Tencent Holdings, Ltd. Communication Services China/Hong Kong 4.5
Trip.com Group, Ltd. Consumer Discretionary China/Hong Kong 4.4
PDD Holdings, Inc. Consumer Discretionary China/Hong Kong 3.9
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 3.9
Meituan Class B Consumer Discretionary China/Hong Kong 3.8
Hon Hai Precision Industry Co., Ltd. Information Technology Taiwan 3.1
MakeMyTrip, Ltd. Consumer Discretionary India 3.0
Samsung Electronics Co., Ltd. Information Technology South Korea 3.0
TOTAL 45.2

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 31/10/2024)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 29.7 26.8 2.9
Consumer Discretionary 27.6 14.4 13.2
Communication Services 14.9 9.7 5.2
Financials 8.8 21.3 -12.5
Industrials 8.2 7.4 0.8
Health Care 1.9 3.6 -1.7
Real Estate 1.5 2.3 -0.8
Consumer Staples 1.0 4.0 -3.0
Energy 1.0 3.4 -2.4
Materials 0.0 4.2 -4.2
Utilities 0.0 2.7 -2.7
Cash and Other Assets, Less Liabilities 5.4 0.0 5.4

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 36.7 36.0 0.7
India 18.5 21.4 -2.9
Taiwan 18.3 21.6 -3.3
Singapore 9.0 3.6 5.4
South Korea 8.2 11.5 -3.3
Vietnam 1.5 0.0 1.5
Indonesia 1.3 1.9 -0.6
Macau 1.0 0.1 0.9
Thailand 0.0 1.7 -1.7
Malaysia 0.0 1.6 -1.6
Philippines 0.0 0.6 -0.6
Cash and Other Assets, Less Liabilities 5.4 0.0 5.4

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 66.3 63.9 2.4
Large Cap ($10B-$25B) 13.6 20.6 -7.0
Mid Cap ($3B-$10B) 11.2 15.0 -3.8
Small Cap (under $3B) 3.6 0.5 3.1
Cash and Other Assets, Less Liabilities 5.4 0.0 5.4

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 30/09/2024)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 100% Benchmark Coverage: 100%
0.0 0.5 -0.5
Tobacco
Fund Coverage: 100% Benchmark Coverage: 99%
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%
23.3 20.4 2.9

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 30/09/2024)

Fund Coverage: 99%; Benchmark Coverage: 99% as of 30/09/2024

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 30 September 2024

Market Environment

  • Many markets in Asia performed strongly despite volatility generated by concerns over a U.S. slowdown, China’s economy and rising interest rates in Japan. Toward the end of the quarter, the Federal Reserve’s 50 basis point (O.50%) interest rate cut, and expectations of further cuts, boosted markets.
  • India’s equity market delivered a robust performance supported by earnings growth. The market is expensive but economic growth rates remain high. Following the formation of a coalition government after the election there are also signs that growth is becoming more balanced to include services and consumption as well as infrastructure and industry.
  • In North Asia, Taiwan’s technology-heavy market was challenged despite the potential growth opportunities that artificial intelligence (AI)-linked segments offer, in part as prior performance had been strong and as questions arose over valuations. South Korea’s market was a weak performer with semiconductor stocks particularly soft.
  • China’s economy continued to struggle with weak consumer sentiment and declining property prices. Toward the end of the quarter its markets rallied after the central bank launched a broad stimulus package with measures to add liquidity, aid the property market, and boost equity markets.

Contributors and Detractors

  • For the quarter ended September 30, 2024, the Asia Innovative Growth Fund returned 5.75% (I Acc USD), while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.55% over the same period.
  • On a country basis, the top three contributors to relative performance were India and Singapore due to stock selection and the U.S. due to an off-benchmark allocation. The top three detractors were Taiwan and South Korea due to stock selection and China/Hong Kong due to an underweight allocation.
  • On a sector basis, the top three contributors to relative performance were consumer discretionary due to an overweight allocation, and communication services and health care due to stock selection. The top three detractors were information technology (IT) due to stock selection, and financials and consumer staples due to an underweight allocation.
  • The largest contributors to absolute performance included Alibaba Group, the largest e-commerce platform company in China, Zomato, a leading Indian online restaurant booking and food delivery company, and Sea, a Singapore-based provider of PC and mobile digital content. The top three detractors included Samsung Electronics, a South Korean semiconductor and consumer electronics maker, SK Hynix, a Korean semiconductor company, and Lam Research, a U.S. semiconductor equipment manufacturer.

Outlook

  • The Fed’s rate cut will, we think, provide an impetus for a number of central banks in Asia to cut their own rates which should be favorable for businesses and economies. We think this is a significant turning point particularly for economies in the region. Fed rate cuts typically also bring downward pressure on the U.S. dollar which is often also a tailwind.
  • For some markets, U.S. rates cuts will have less of an impact. Taiwanese equities, for example, have already gained from the AI boom and valuations are now a little stretched. In contrast, the rate-sensitive economies of Southeast Asia, which are building out data centers to support global adoption of AI, are positioned to gain from U.S. monetary easing in our view.
  • In China, it will take time to see if the stimulus measures provide a sustainable catalyst for recovery. Overall, we expect volatility to continue across the region, particularly as we approach and pass through the U.S. election.

 

Rolling 12 Month Returns For the period ended 30/09/2024 - I (Acc)
Name 2024 2023 2022 2021 2020 Inception Date
Matthews Asia Innovative Growth Fund (USD)
29.26% 0.67% -35.71% N.A. N.A. 23/03/2021
MSCI All Country Asia ex Japan Index (USD)
29.39% 11.28% -28.48% N.A. N.A.
Matthews Asia Innovative Growth Fund (GBP)
18.28% -9.42% -21.62% N.A. N.A. 23/03/2021
MSCI All Country Asia ex Japan Index (GBP)
17.74% 1.78% -13.61% 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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