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Matthews Asia Sustainable Future Fund

Snapshot
  • Unconstrained strategy focused on companies that make a positive environmental, social and eco­nomic impact in Asia ex Japan
  • All-cap portfolio with diversified emerging and frontier market exposures
  • Deep bottom-up fundamental approach that seeks to generate attractive long-term risk-adjusted returns by investing in well-governed companies

21/07/2022

Inception Date

-0.10%

YTD Return (USD)

(as of 20/01/2025)

$10.36

NAV (USD)

(as of 20/01/2025)

+0.19

1 Day NAV Change

(as of 20/01/2025)

Objective

The Fund seeks to achieve long-term capital appreciation while investing in companies that contribute to a sustainable future.

Sustainability

The Fund has sustainable investment as its objective within the meaning of Article 9 of SFDR. In managing the Fund, the Investment Manager will apply its ESG investment guidelines further described in “General Information Relating To Sustainability” in the main part of the Prospectus.

Strategy

The Fund seeks to achieve its investment objective by investing, directly or indirectly, primarily (i.e., at least 65% of its net assets) in equities of companies located in, or with substantial ties to, the Asia ex Japan region that the Investment Manager believes contribute positively to one or more of its sustainability focus areas. On an ancillary basis, the Fund may invest in other permitted assets on a worldwide basis. For the purpose of this policy, the Asia ex Japan region consists of all countries and markets in Asia excluding Japan, but including all other developed, emerging and frontier countries and markets in Asia. The Fund seeks to invest primarily in companies that the Investment Manager believes, based on its analysis, meet the following environmental, social and governance ("ESG") standards: (1) they do not cause significant environmental or social harm; (2) they have good governance practices; and (3) they contribute to a sustainable future. In evaluating whether a company meets these ESG standards, the Investment Manager focuses on a company's contribution or potential future contribution to positive ESG outcomes based on a variety of criteria, which may include some or all of the following: climate change mitigation and adaptation, clean environment, circular economy, or sustainable production and consumption; health and well-being, human capital development, inclusive development or enablement of sustainable development; and/or good governance practices that demonstrate a strong commitment to integration of ESG principles.

Fund Facts
Inception Date 21/07/2022
Fund Assets $5.73 million (31/12/2024)
Base Currency USD
ISIN: LU2459556697 (USD) LU2459556770 (GBP)
Bloomberg Symbol MAASFIA:LX (USD) MAASFIG:LX (GBP)
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia - Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region
SFDR Classification Article 9
Fees & Expenses
Management Fee 0.75%
Total Expense Ratio 0.90% ( USD ) 0.90% ( GBP )

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 Investment Manager's consideration of ESG factors in making its investment decisions materially impact the investment performance of the Fund. These and other risks associated with investing in the Fund can be found in the Prospectus.

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

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
    Returns
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As of 31/12/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Sustainable Future Fund (USD)
-2.54% -11.59% 3.60% 3.60% n.a. n.a. n.a. 1.50% 21/07/2022
MSCI All Country Asia ex Japan Index (USD)
0.19% -7.41% 12.51% 12.51% n.a. n.a. n.a. 6.25%
Matthews Asia Sustainable Future Fund (GBP)
-1.30% -5.46% 5.11% 5.11% n.a. n.a. n.a. -0.53% 21/07/2022
MSCI All Country Asia ex Japan Index (GBP)
1.68% -0.84% 14.52% 14.52% n.a. n.a. n.a. 4.23%
As of 31/12/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Sustainable Future Fund (USD)
-2.54% -11.59% 3.60% 3.60% n.a. n.a. n.a. 1.50% 21/07/2022
MSCI All Country Asia ex Japan Index (USD)
0.19% -7.41% 12.51% 12.51% n.a. n.a. n.a. 6.25%
Matthews Asia Sustainable Future Fund (GBP)
-1.30% -5.46% 5.11% 5.11% n.a. n.a. n.a. -0.53% 21/07/2022
MSCI All Country Asia ex Japan Index (GBP)
1.68% -0.84% 14.52% 14.52% n.a. n.a. n.a. 4.23%
For the years ended December 31st
Name 2024 2023 2022 2021 2020
Matthews Asia Sustainable Future Fund (USD)
3.60% 3.84% n.a. n.a. n.a.
MSCI All Country Asia ex Japan Index (USD)
12.51% 6.34% n.a. n.a. n.a.
Matthews Asia Sustainable Future Fund (GBP)
5.11% -1.78% n.a. n.a. n.a.
MSCI All Country Asia ex Japan Index (GBP)
14.52% 0.34% n.a. n.a. n.a.
For the period ended 31/12/2024
Name 2024 2023 2022 2021 2020 Inception Date
Matthews Asia Sustainable Future Fund (USD)
3.60% 3.84% n.a. n.a. n.a. 21/07/2022
MSCI All Country Asia ex Japan Index (USD)
12.51% 6.34% n.a. n.a. n.a.
Matthews Asia Sustainable Future Fund (GBP)
5.11% -1.78% n.a. n.a. n.a. 21/07/2022
MSCI All Country Asia ex Japan Index (GBP)
14.52% 0.34% n.a. 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 31/12/2024)
Fund Benchmark
Number of Positions 44 1,054
Weighted Average Market Cap $85.6 billion $180.4 billion
Active Share 90.6 n.a.
P/E using FY1 estimates 17.4x 13.8x
P/E using FY2 estimates 14.5x 12.6x
Price/Cash Flow 12.6 9.2
Price/Book 2.4 1.8
Return On Equity 11.3 15.4
EPS Growth (3 Yr) 20.8% 12.8%

Sources: Factset Research Systems, Inc.

Top 10 Holdings

(as of 31/12/2024)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 6.8
Meituan Class B Consumer Discretionary China/Hong Kong 6.4
Bandhan Bank, Ltd. Financials India 6.0
Full Truck Alliance Co., Ltd. Industrials China/Hong Kong 5.4
JD Health International, Inc. Consumer Staples China/Hong Kong 5.0
Hong Kong Exchanges & Clearing, Ltd. Financials China/Hong Kong 4.4
Legend Biotech Corp. Health Care China/Hong Kong 4.1
Indus Towers, Ltd. Communication Services India 4.0
Shriram Finance, Ltd. Financials India 3.5
Elite Material Co., Ltd. Information Technology Taiwan 3.0
TOTAL 48.6

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 31/12/2024)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 26.3 27.2 -0.9
Financials 17.6 22.0 -4.4
Industrials 15.1 7.4 7.7
Consumer Discretionary 13.0 14.0 -1.0
Consumer Staples 6.5 3.9 2.6
Communication Services 6.3 10.2 -3.9
Health Care 5.8 3.5 2.3
Real Estate 4.0 2.2 1.8
Materials 0.2 3.7 -3.5
Energy 0.0 3.2 -3.2
Utilities 0.0 2.7 -2.7
Cash and Other Assets, Less Liabilities 5.1 0.0 5.1

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 40.6 36.1 4.5
India 23.8 21.9 1.9
Taiwan 18.1 22.1 -4.0
South Korea 3.7 10.2 -6.5
United States 2.5 0.0 2.5
Vietnam 2.0 0.0 2.0
Indonesia 1.8 1.7 0.1
Philippines 1.4 0.6 0.8
Bangladesh 1.0 0.0 1.0
Singapore 0.0 3.9 -3.9
Malaysia 0.0 1.7 -1.7
Thailand 0.0 1.6 -1.6
Macau 0.0 0.1 -0.1
Cash and Other Assets, Less Liabilities 5.1 0.0 5.1

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 29.1 63.5 -34.4
Large Cap ($10B-$25B) 21.1 20.5 0.6
Mid Cap ($3B-$10B) 18.5 15.5 3.0
Small Cap (under $3B) 26.2 0.5 25.7
Cash and Other Assets, Less Liabilities 5.1 0.0 5.1

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: 98% Benchmark Coverage: 100%
0.0 0.5 -0.5
Tobacco
Fund Coverage: 98% Benchmark Coverage: 99%
0.0 0.4 -0.4
Alcohol
Fund Coverage: 96% Benchmark Coverage: 100%
0.0 0.7 -0.7
Gambling
Fund Coverage: 96% Benchmark Coverage: 100%
0.0 0.3 -0.3
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%
21.9 20.4 1.5

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.
Alcohol: Represents companies that generate revenue from alcohol manufacturing or production.
Gambling: Represents companies that generate more than 50% of revenue from gambling.
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: 100%; 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 9 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

Vivek  Tanneeru photo
Vivek Tanneeru

Lead Manager

Inbok  Song photo
Inbok Song

Co-Manager

Commentary

Period ended 31 December 2024

Market Environment

  • The Asia region fared well in 2024 amid divergent trends between markets. Changing expectations for U.S. interest rates and a fluctuation in the U.S. dollar were big influencers as was the ongoing strength in the artificial intelligence (AI) space.
  • After a strong start, India’s market experienced a selloff when Prime Minister Modi failed to win a majority in the elections in June, but quickly recovered after Modi secured a ruling coalition with allies. Later in the year, the market experienced a small correction as economic expansion eased and there was a downgrade in earnings, particularly in the consumer space.
  • Taiwan’s market powered through the year thanks to demand for its AI chips while South Korea was one of the biggest underperformers in emerging markets amid softening demand in the auto sector and a cyclical downturn in segments such as heavy industries. The market also experienced volatility after South Korea’s president briefly imposed martial law and then was impeached.
  • Chinese equities had a volatile start to the year and then rallied through the spring helped by government initiatives to support the property sector. The market sagged through the summer before surging in September as the government unveiled a broad package of stimulus measures aimed at kickstarting a recovery in the real estate market, lifting consumer confidence and improving liquidity in the stock market.
  • In Southeast Asia, domestic demand showed signs of recovery. Several economies including the Philippines benefited from domestic infrastructure agendas while some markets gained from specific trends, such as demand for AI related-date centers in Malaysia. In the second half of the year, the region’s performance was impacted by signs that the Federal Reserve may cut rates more slowly than anticipated and by a strengthening dollar.

Contributors and Detractors

  • For the year ended December 31, 2024, the Asia Sustainable Future Fund returned 3.60%, (I Acc USD) while its benchmark, the MSCI All Country Asia ex Japan Index, returned 12.51% over the same period.
  • On a country basis, the top three contributors to relative performance were India due to stock selection, the U.S. due to an off-benchmark allocation and Thailand due to zero allocation. The top three detractors were Taiwan, China/Hong Kong and South Korea due to stock selection.
  • On a sector basis, the top three contributors to relative performance were consumer discretionary, industrials and real estate due to stock selection. The top three detractors were information technology (IT), health care and financials due to stock selection.
  • The top three contributors to absolute performance during the year included Meituan, China’s largest food delivery service and internet platform company, Full Truck Alliance, a Chinese freight marketplace operator, and Shriram Finance, an Indian financial services provider. The largest detractors included Bandhan Bank, an Indian commercial bank, Legend Biotech, a global, commercial-stage biopharma company, and Samsung SDI, a South Korean battery manufacturing company.

Outlook

  • A key narrative for the region in 2025 could be the scale of the impact of the new Trump administration. Its policies could support a higher dollar, U.S. Treasury yields and interest rates and it could also impose tariffs on countries including China. At the same time, a Trump administration could also stoke a stronger U.S. economy and that’s good for global growth and for risk assets.
  • After the first quarter, provided there is more clarity on U.S. trade policy as well as from China on its fiscal plans to boost its lackluster economy and real estate sector, we think volatility may subside and the outlook for the region will improve. Taiwan should continue to benefit from strong demand for AI-related chips while in India we are focused more on financials, large caps and companies with consistent earnings growth where expectations aren’t so high.
  • At the global macro level, we will likely continue to see Fed rate cuts. This may not be a clear tailwind for Asian emerging markets but will be less of a headwind, in our view. At this juncture, we would say that a large component of returns from the region in 2025 will be backloaded into the second half of the year.

 

Rolling 12 Month Returns For the period ended 31/12/2024 - I (Acc)
Name 2024 2023 2022 2021 2020 Inception Date
Matthews Asia Sustainable Future Fund (USD)
3.60% 3.84% N.A. N.A. N.A. 21/07/2022
MSCI All Country Asia ex Japan Index (USD)
12.51% 6.34% N.A. N.A. N.A.
Matthews Asia Sustainable Future Fund (GBP)
5.11% -1.78% N.A. N.A. N.A. 21/07/2022
MSCI All Country Asia ex Japan Index (GBP)
14.52% 0.34% N.A. 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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