Matthews Emerging Markets Discovery Fund

  • Seeks alpha in innovative, capital efficient entrepreneurial companies in emerging markets
  • 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


Inception Date


YTD Return (USD)

(as of 29/02/2024)



(as of 29/02/2024)


1 Day NAV Change

(as of 29/02/2024)


Seeks to achieve long term capital appreciation.


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.


Under normal market conditions, the Fund seeks to achieve its investment objective by investing, directly or indirectly, primarily (i.e., at least 65% of its total net assets) in equities of Small Companies located in or with substantial ties to emerging market countries. Emerging Market countries generally include every country in the world except the United States, Australia, Canada, Hong Kong, Israel, Japan, New Zealand, Singapore and most of the countries in Western Europe. Certain emerging market countries may also be classified as “frontier” market countries, which are a subset of emerging market countries with newer or even less developed economies and markets, such as Sri Lanka and Vietnam. The list of emerging market countries and frontier market countries may change from time to time. In addition, the Fund may also invest in depositary receipts that are treated as emerging markets investments, including American, European and Global Depositary Receipts.


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 15/09/2023
Fund Assets $16.29 million (31/01/2024)
Base Currency USD
ISIN: LU2651608676 (USD) LU2651608759 (GBP)
Benchmark MSCI Emerging Markets Small Cap Index
Geographic Focus Emerging market countries generally include every country in the world except the United States, Australia, Canada, Hong Kong, Israel, Japan, New Zealand, Singapore and most of the countries in Western Europe.
SFDR Classification Article 8
Fees & Expenses
Management Fee 1.00%


  • Monthly
  • Quarterly
  • data_graph_selected Created with Sketch.
As of 31/01/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Emerging Markets Discovery Fund (USD)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15/09/2023
MSCI Emerging Markets Small Cap Index (USD)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Matthews Emerging Markets Discovery Fund (GBP)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15/09/2023
MSCI Emerging Markets Small Cap Index (GBP)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
As of 31/12/2023
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Emerging Markets Discovery Fund (USD)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15/09/2023
MSCI Emerging Markets Small Cap Index (USD)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Matthews Emerging Markets Discovery Fund (GBP)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15/09/2023
MSCI Emerging Markets Small Cap Index (GBP)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

The Fund has commenced operations from 15 September 2023 and performance will not be shown until the fund has reached one year since inception.

Portfolio Characteristics

(as of 31/01/2024)
Fund Benchmark
Number of Positions 67 1,981
Weighted Average Market Cap $4.3 billion $1.9 billion
Active Share 97.3 n.a.
P/E using FY1 estimates 17.7x 14.3x
P/E using FY2 estimates 14.3x 12.6x
Price/Cash Flow 10.1 7.2
Price/Book 2.2 1.5
Return On Equity 12.8 14.4
EPS Growth (3 Yr) 30.4% 24.8%

Sources: Factset Research Systems, Inc.

Top 10 Holdings

(as of 31/01/2024)
Name Sector Country % Net Assets
Shriram Finance, Ltd. Financials India 7.6
Bandhan Bank, Ltd. Financials India 6.0
M31 Technology Corp. Information Technology Taiwan 4.2
Legend Biotech Corp. Health Care China/Hong Kong 3.4
Full Truck Alliance Co., Ltd. Industrials China/Hong Kong 3.3
Wiwynn Corp. Information Technology Taiwan 3.0
Hugel, Inc. Health Care South Korea 2.9
Grupo SBF SA Consumer Discretionary Brazil 2.8
Airtac International Group Industrials China/Hong Kong 2.8
Saudi Tadawul Group Holding Co. Financials Saudi Arabia 2.7
TOTAL 38.7

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 31/01/2024)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 21.3 17.3 4.0
Financials 20.1 10.8 9.3
Industrials 19.7 17.5 2.2
Consumer Discretionary 18.1 11.6 6.5
Health Care 10.3 8.8 1.5
Real Estate 5.1 6.4 -1.3
Communication Services 2.0 3.6 -1.6
Materials 1.4 12.2 -10.8
Consumer Staples 1.4 6.4 -5.0
Utilities 0.6 3.7 -3.1
Energy 0.0 1.8 -1.8
Cash and Other Assets, Less Liabilities 0.1 0.0 0.1

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

Country Fund Benchmark Difference
India 25.0 27.8 -2.8
China/Hong Kong 24.1 6.5 17.6
Taiwan 16.0 22.2 -6.2
Brazil 10.4 5.0 5.4
South Korea 6.9 12.4 -5.5
Vietnam 4.6 0.0 4.6
Chile 3.2 0.8 2.4
Saudi Arabia 2.7 4.0 -1.3
Poland 1.8 1.2 0.6
Philippines 1.7 0.8 0.9
Indonesia 1.1 1.8 -0.7
Thailand 1.0 3.0 -2.0
Turkey 0.6 2.3 -1.7
South Africa 0.5 3.5 -3.0
Bangladesh 0.4 0.0 0.4
Mexico 0.1 2.1 -2.0
Malaysia 0.0 2.4 -2.4
Kuwait 0.0 1.1 -1.1
United Arab Emirates 0.0 1.1 -1.1
Qatar 0.0 0.7 -0.7
Egypt 0.0 0.5 -0.5
Greece 0.0 0.5 -0.5
Czech Republic 0.0 0.1 -0.1
Hungary 0.0 0.1 -0.1
Cash and Other Assets, Less Liabilities 0.1 0.0 0.1

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 0.0 0.0 0.0
Large Cap ($10B-$25B) 15.6 0.1 15.5
Mid Cap ($3B-$10B) 35.2 17.9 17.3
Small Cap (under $3B) 49.1 82.0 -32.9
Cash and Other Assets, Less Liabilities 0.1 0.0 0.1

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 31/12/2023)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 96% Benchmark Coverage: 98%
0.0 0.3 -0.3
Fund Coverage: 96% Benchmark Coverage: 98%
0.0 0.2 -0.2
Name Fund Benchmark Difference
UN Global Compact Violators
Fund Coverage: 100% Benchmark Coverage: 96%
0.0 0.2 -0.2
Board Diversity
Fund Coverage: 100% Benchmark Coverage: 83%
18.7 19.3 -0.6

Board Diversity: Represents the weighted average ratio of female board members in investee companies.
Tobacco: Represents companies that generate revenue from tobacco manufacturing 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 31/12/2023)

Fund Coverage: 98%; Benchmark Coverage: 36% as of 31/12/2023

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

Vivek  Tanneeru photo
Vivek Tanneeru

Lead Manager

Jeremy  Sutch, CFA photo
Jeremy Sutch, CFA


Alex  Zarechnak photo
Alex Zarechnak



Period ended 31 December 2023

The Matthews Emerging Markets Discovery Fund was launched on 15 September 2023. This is the first commentary for the Matthews Emerging Markets Discovery Fund. 

Market Environment   

2023 was a year of opportunities and challenges marked by two distinct narratives: the Federal Reserve’s ‘higher for longer’ interest rate strategy and China’s labored and ongoing struggle to recover from the pandemic. Elevated interest rates and a strong U.S. dollar posed headwinds while China’s travails impacted the economies of markets like Thailand. But there were also strong performances by markets like India which benefited from national infrastructure programs and strong domestic investor inflows. Smaller companies in emerging markets also thrived in many cases in 2023. And toward the end of the year there was a general consensus that inflation had peaked in the global economy and that the Fed would pivot toward cutting rates in 2024. This provided some tailwinds across markets. 
Hungary was the best-performing emerging market in the benchmark index during 2023, followed by Poland, Egypt and Greece, while larger markets like South Korea, Brazil and India and Mexico delivered robust returns. China/Hong Kong was the worst-performer followed by Thailand and Kuwait. From a sector perspective, information technology (IT) was the top performer, supported by market exuberance over advancements in commercial artificial intelligence (AI), while consumer discretionary and real estate were the worst performers, impacted in part by China’s challenges in these sectors. 

From a currency perspective, Latin American currencies like the Colombian peso, Mexican peso and Brazilian real appreciated against the U.S. dollar alongside Eastern European currencies like the Polish zloty and Hungarian forint. The Argentinian peso, Turkish lira and South African rand were the worst performers.

Performance Contributors and Detractors  

From a country perspective, our allocation and stock selection in Brazil as well as South Korea contributed the most relative returns since inception. Our underweight allocation to Turkey as well as Thailand also aided returns. On the flip side, stock selection in India and an overweight to China/Hong Kong were the biggest detractors to relative returns in the period. As the year progressed, markets grew more pessimistic about the prospects of China’s economic recovery, for a turnaround in its real estate sector and for an improvement in consumer sentiment. In our view, the MSCI Emerging Markets Small Cap Index has a much smaller allocation to China than is warranted as it doesn’t have mainland A-shares representation, and this accounts for the bulk of the small-cap investment universe in China. 

At the sector level, stock selection in IT, consumer staples and real estate contributed to returns. In contrast, stock selection in financials, industrials and communication services were the biggest detractors to relative returns. 
From a holdings perspective, Shriram Finance, an Indian financial services provider, and YDUQS, a Brazilian on-campus and distance-learning education company, were among the top contributors to relative returns. Shriram continued to deliver strong results and, given its very attractive valuations, the stock performed well. YDUQS recovered well from pandemic-related weakness and as Brazilian interest rates started dropping, the market took a more positive view on the company’s reduced debt-servicing burden. Very depressed valuations earlier in the year also helped the stock perform well.

On the other hand, China consumption-oriented names such as Beijing Capital International Airport Co. and Xtep International, a sporting goods company, were among the biggest detractors to relative returns. The Chinese airport operator was weak on the back of reduced expectations on the rebound in consumption broadly, and in air travel services, in particular, as 2023 progressed. We remain positive on the longer-term outlook for international travel for Beijing Capital International Airport.


Today, emerging markets contain many companies with solid business models and quality management. In addition, U.S. interest rates are looking downward which should create some macro tailwinds for the coming year. As well as the macro landscape and global trade, our focus in 2024 will be on key emerging markets that are generating robust growth, like India, and those that are challenged, like China. We are also focused on economies that might be turning a corner like Turkey.

Longer term, we expect the emerging markets gross domestic product (GDP) growth-differential with developed markets to improve from a 23-year low reached in 2022. This, alongside relatively attractive valuations, should potentially lend support to better equity performance against developed markets compared with the last decade.

We believe small companies in emerging markets offer long-term growth opportunities given their innovation and domestic consumption orientation while also being less exposed to regulatory and geo-political risks. We continue to find quality businesses at attractive valuations in this asset class.

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. 

Index Definitions