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Matthews Asia Discovery Fund

Portfolio Positioning

Effective 30 August 2024, the Fund was renamed from the Asia Small Companies Fund to the Asia Discovery Fund.

  • Seeks alpha in innovative, capital efficient entrepreneurial companies in Asia ex Japan
  • Focus on firms that have a strong competitive advantage through pricing power, distribution capability, and/or differentiated technologies and services
  • Bias toward businesses that cater to rising domestic consumer demand

30/04/2013

Inception Date

7.33%

YTD Return (USD)

(as of 15/07/2025)

$23.13

NAV (USD)

(as of 15/07/2025)

+0.21

1 Day NAV Change

(as of 15/07/2025)

Objective

Seeks to achieve 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 equities of small companies located in the Asia ex Japan Region, and may invest in other permitted assets on worldwide. The Fund defines Small Companies as companies with market capitalization no higher than the greater of US $5 billion or the market capitalization of the largest company included in the Fund's primary benchmark, the MSCI All Country Asia ex Japan Small Cap Index.

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 Fund invests in smaller companies, which are more volatile and less liquid than larger companies.

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

Fund Facts
Inception Date 30/04/2013
Fund Assets $92.73 million (30/06/2025)
Base Currency USD
ISIN: LU0871674296 (USD) LU0871674379 (GBP) LU0871674023 (EUR)
Bloomberg Symbol MATASCI:LX (USD) MATASSI:LX (GBP) MAASCIE:LX (EUR)
Benchmark MSCI All Country Asia ex Japan Small Cap 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 1.00%
Total Expense Ratio 1.15% ( USD ) 1.15% ( GBP ) 1.15% ( EUR )

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
    Returns
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As of 30/06/2025
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Discovery Fund (USD)
7.25% 10.90% 4.36% -2.22% 4.16% 9.39% 6.64% 6.89% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
6.44% 18.36% 9.96% 8.71% 13.11% 13.57% 5.82% 5.79%
Matthews Asia Discovery Fund (GBP)
5.43% 4.80% -4.59% -9.82% -0.04% 7.00% 8.10% 8.93% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
4.74% 11.48% 0.49% 0.28% 8.64% 11.24% 7.29% 8.14%
Matthews Asia Discovery Fund (EUR)
3.68% 2.39% -7.46% -10.78% 0.08% n.a. n.a. 4.92% 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
2.94% 8.91% -3.00% -0.75% 8.82% n.a. n.a. 8.86%
As of 30/06/2025
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Discovery Fund (USD)
7.25% 10.90% 4.36% -2.22% 4.16% 9.39% 6.64% 6.89% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
6.44% 18.36% 9.96% 8.71% 13.11% 13.57% 5.82% 5.79%
Matthews Asia Discovery Fund (GBP)
5.43% 4.80% -4.59% -9.82% -0.04% 7.00% 8.10% 8.93% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
4.74% 11.48% 0.49% 0.28% 8.64% 11.24% 7.29% 8.14%
Matthews Asia Discovery Fund (EUR)
3.68% 2.39% -7.46% -10.78% 0.08% n.a. n.a. 4.92% 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
2.94% 8.91% -3.00% -0.75% 8.82% n.a. n.a. 8.86%
For the years ended December 31st
Name 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Matthews Asia Discovery Fund (USD)
-3.45% 11.27% -14.49% 22.19% 46.12% 17.53% -14.53% 30.80% -1.09% -11.08%
MSCI All Country Asia ex Japan Small Cap Index (USD)
7.11% 22.09% -19.93% 21.23% 26.60% 7.58% -18.63% 33.84% -2.05% -3.28%
Matthews Asia Discovery Fund (GBP)
-2.01% 5.26% -4.17% 23.80% 41.22% 14.03% -9.84% 19.38% 18.87% -6.49%
MSCI All Country Asia ex Japan Small Cap Index (GBP)
9.02% 15.20% -9.84% 22.35% 22.69% 3.43% -13.57% 22.25% 16.83% 2.32%
Matthews Asia Discovery Fund (EUR)
2.60% 7.48% -9.25% 32.41% n.a. n.a. n.a. n.a. n.a. n.a.
MSCI All Country Asia ex Japan Small Cap Index (EUR)
14.26% 17.96% -14.68% 30.44% n.a. n.a. n.a. n.a. n.a. n.a.
For the period ended 30/06/2025
Name 2025 2024 2023 2022 2021 Inception Date
Matthews Asia Discovery Fund (USD)
-2.22% 7.48% 7.54% -11.04% 55.78% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
8.71% 21.20% 9.83% -19.67% 62.52%
Matthews Asia Discovery Fund (GBP)
-9.82% 7.53% 3.00% 1.84% 37.86% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
0.28% 21.89% 4.92% -8.63% 45.36%
Matthews Asia Discovery Fund (EUR)
-10.78% 9.10% 2.99% 1.73% n.a. 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
-0.75% 23.37% 5.25% -8.88% 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 30/06/2025)
Fund Benchmark
Number of Positions 66 1,577
Weighted Average Market Cap $4.3 billion $12.9 billion
Active Share 97.7 n.a.
P/E using FY1 estimates 16.4x 16.3x
P/E using FY2 estimates 14.5x 13.9x
Price/Cash Flow 10.8 9.3
Price/Book 2.3 1.5
Return On Equity 14.8 11.5
EPS Growth (3 Yr) 31.7% 6.6%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/05/2025)
-6.11%
Alpha
0.88
Beta
68.59%
Upside Capture
99.91%
Downside Capture
-0.26
Sharpe Ratio
-1.01
Information Ratio
6.83%
Tracking Error
83.01

Fund Risk Metrics are reflective of Class I USD ACC shares.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 30/06/2025)
Name Sector Country % Net Assets
Bandhan Bank, Ltd. Financials India 8.0
Hugel, Inc. Health Care South Korea 5.4
Legend Biotech Corp. Health Care China/Hong Kong 5.3
Poya International Co., Ltd. Consumer Discretionary Taiwan 3.6
Rainbow Children's Medicare, Ltd. Health Care India 2.7
Cartrade Tech, Ltd. Consumer Discretionary India 2.7
Shriram Finance, Ltd. Financials India 2.6
Radico Khaitan, Ltd. Consumer Staples India 2.6
Gold Circuit Electronics, Ltd. Information Technology Taiwan 2.5
Full Truck Alliance Co., Ltd. Industrials China/Hong Kong 2.4
TOTAL 37.8

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 30/06/2025)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 20.6 19.0 1.6
Consumer Discretionary 16.5 9.8 6.7
Industrials 15.4 19.3 -3.9
Health Care 15.3 11.6 3.7
Financials 13.7 10.4 3.3
Consumer Staples 8.3 5.1 3.2
Communication Services 5.3 4.1 1.2
Real Estate 3.9 7.6 -3.7
Energy 1.9 1.3 0.6
Materials 0.1 9.7 -9.6
Utilities 0.0 2.2 -2.2
Liabilities in Excess of Cash and Other Assets -0.8 0.0 -0.8

Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.

Country Fund Benchmark Difference
India 34.2 31.9 2.3
China/Hong Kong 23.6 17.1 6.5
Taiwan 18.9 22.1 -3.2
South Korea 13.1 15.7 -2.6
Vietnam 4.6 0.0 4.6
Philippines 2.6 1.1 1.5
Indonesia 2.0 1.9 0.1
Singapore 0.8 4.8 -4.0
Bangladesh 0.7 0.0 0.7
United States 0.3 0.0 0.3
Malaysia 0.0 3.0 -3.0
Thailand 0.0 2.5 -2.5
Liabilities in Excess of Cash and Other Assets -0.8 0.0 -0.8

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 0.0 0.1 -0.1
Large Cap ($10B-$25B) 9.9 0.0 9.9
Mid Cap ($3B-$10B) 47.2 31.8 15.4
Small Cap (under $3B) 43.7 68.0 -24.3
Liabilities in Excess of Cash and Other Assets -0.8 0.0 -0.8

The Portfolio’s market cap exposure breakdown presented is used for comparison purposes and the definition of the capitalization breakdown is from MSCI.

The Fund defines Small Companies as companies with market capitalization no higher than the greater of US$5 billion or the market capitalization of the largest company included in the Fund's primary benchmark, the MSCI All Country Asia ex Japan Small Cap Index.

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 31/03/2025)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 95% Benchmark Coverage: 99%
0.0 0.5 -0.5
Tobacco
Fund Coverage: 93% Benchmark Coverage: 99%
0.0 0.4 -0.4
Name Fund Benchmark Difference
UN Global Compact Violators
Fund Coverage: 100% Benchmark Coverage: 98%
0.0 0.1 -0.1
Board Diversity
Fund Coverage: 100% Benchmark Coverage: 97%
19.9 18.3 1.6

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.

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

Vivek  Tanneeru photo
Jeremy  Sutch, CFA photo
Sherwood  Zhang, CFA photo

Commentary

Period ended 30 June 2025

Market Environment

  • The region’s markets had a positive quarter as concerns over U.S. tariffs eased amid potential trade deals while growth in the artificial intelligence (AI) supply chain remained strong. A temporarily weakened U.S. dollar, caused by concerns over U.S. trade policy and debt levels, also provided a tailwind. The region overall gained 12.5%.
  • South Korea was the top performing market in the region, buoyed by the election of President Lee Jae Myung who is seen as a progressive and market friendly leader. India’s performance improved as the central bank cut rates to try and boost consumer spending while in China, performance was impacted by a tit-for-tat escalation of tariffs with the U.S.
  • Markets in Southeast Asia were affected by domestic political issues and concerns over U.S. tariffs. A major source of uncertainty in the period was the Israel-Iran conflict and the implications it may have for the wider region and global economy.

Contributors and Detractors

  • For the quarter ended June 30, 2025, the Asia Discovery Fund returned 10.90%, (I Acc USD) while its benchmark, the MSCI All Country Asia ex Japan Small Cap Index, returned 18.36% over the same period.
  • On a country basis, the top three contributors to relative performance were Taiwan due to stock selection, Singapore and Thailand due to an underweight allocation. The top three detractors were China/Hong Kong and South Korea due to stock selection and Vietnam due to an off-benchmark allocation.
  • On a sector basis, the top three contributors to relative performance were information technology (IT) and energy due to stock selection and materials due to an underweight allocation. The top three detractors were industrials, consumer discretionary and communication services due to stock selection.
  • The largest contributors to absolute performance included Bandhan Bank, an Indian commercial bank, Hugel, a South Korean maker of beauty and cosmetics products, and Elite Material, a Taiwanese chip manufacturing company. The top three detractors included Flat Glass Group, a Chinese glass products manufacturer, Merida Industry Co., a Taiwanese consumer discretionary company, and Full Truck Alliance, a Chinese freight marketplace operator.

Outlook

  • With President Trump’s July 9 tariff deadline for reaching trade agreements approaching, more market volatility is to be expected. However, we believe the peak fear of tariffs has passed—barring any significant escalation in duties on countries where agreements are not reached.
  • We also think that earnings growth improvements in Asia could potentially offer significant upside pressure to investment returns. During the quarter, a large proportion of returns were tied to increasing valuations and currency movements with limited impact from improving financial results.
  • A potential loosening of U.S. monetary policy and a weaker dollar would also be favorable for the region especially those economies exposed to global trade. In China, while a meaningful pickup in property and general consumption has yet to be seen, we anticipate some progress later in the year and into 2026.
  • As summer headwinds ease, in terms of seasonality Middle East conflicts, trade and the U.S. economy, we believe there will be greater clarity on the prospects for global markets. This should allow the drivers of Asian markets—earnings recovery, diversification, a weaker dollar, and cheap valuations—to gain traction in our view.
Rolling 12 Month Returns For the period ended 30/06/2025 - I (Acc)
Name 2025 2024 2023 2022 2021 Inception Date
Matthews Asia Discovery Fund (USD)
-2.22% 7.48% 7.54% -11.04% 55.78% 30/04/2013
MSCI All Country Asia ex Japan Small Cap Index (USD)
8.71% 21.20% 9.83% -19.67% 62.52%
Matthews Asia Discovery Fund (GBP)
-9.82% 7.53% 3.00% 1.84% 37.86% 30/04/2014
MSCI All Country Asia ex Japan Small Cap Index (GBP)
0.28% 21.89% 4.92% -8.63% 45.36%
Matthews Asia Discovery Fund (EUR)
-10.78% 9.10% 2.99% 1.73% N.A. 30/12/2020
MSCI All Country Asia ex Japan Small Cap Index (EUR)
-0.75% 23.37% 5.25% -8.88% 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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