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Matthews Asia ex Japan Total Return Equity Fund

Portfolio Manager changes to the Matthews Asia ex Japan Total Return Equity Fund effective 05 December 2023.

Effective 17 February 2023, the Asia ex Japan Dividend Fund was renamed to the Asia ex Japan Total Return Equity Fund. Read our Q&A

 Snapshot
  • Total return strategy seeks to access the growth of Asia Pacific ex Japan with lower volatility
  • Unconstrained all-cap portfolio with a quality bias
  • Flexible approach offers participation in both growth and value markets

30/11/2015

Inception Date

0.23%

YTD Return (USD)

(as of 29/02/2024)

$17.22

NAV (USD)

(as of 29/02/2024)

+0.06

1 Day NAV Change

(as of 29/02/2024)

Objective

Seeks total return through capital appreciation and current income.

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 pursues its objective by primarily investing in companies that exhibit attractive dividend yields and/or the potential to grow dividends over time. The Fund seeks to achieve its investment objective by investing, directly or indirectly, at least 65% of its total net assets, in income-paying publicly traded common stocks, preferred stocks, convertible preferred stocks and other equity-related instruments (including, for example, investment trusts and other financial instruments) of companies located in the Asia ex Japan region.

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. There is no guarantee that the Fund or the companies in its portfolio will pay or continue to pay dividends.

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

Fund Facts
Inception Date 30/11/2015
Fund Assets $155.23 million (31/01/2024)
Base Currency USD
ISIN: LU1311311358 (USD) LU1311311515 (GBP) LU1311311788 (EUR)
Bloomberg Symbol MAAEIAU:LX (USD) MAAEIAG:LX (GBP) MAEJDIE: LX (EUR)
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia ex Japan: Consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region, excluding Japan
SFDR Classification Article 8
Fees & Expenses
Management Fee 0.75%
Total Expense Ratio As of 31/03/2022 0.90% ( USD ) 0.90% ( GBP ) 0.90% ( EUR )

Performance

  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
    Returns
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As of 31/01/2024
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
-5.30% 0.62% -5.30% -20.60% -13.94% 2.74% n.a. 6.14% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
-5.44% 4.72% -5.44% -7.09% -9.38% 1.41% n.a. 4.91%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-5.08% -3.61% -5.08% -23.00% -11.66% 3.45% n.a. 8.35% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
-5.34% -0.21% -5.34% -10.18% -7.07% 2.07% n.a. 7.08%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-3.42% -1.38% -3.42% -20.68% -10.66% n.a. n.a. -1.99% 31/07/2020
MSCI All Country Asia ex Japan Index (EUR)
-3.84% 1.90% -3.84% -7.10% -5.94% n.a. n.a. 0.60%
As of 31/12/2023
Annualized Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
0.47% 0.47% -8.71% -8.71% -11.13% 4.46% n.a. 6.92% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
3.55% 6.48% 6.34% 6.34% -6.43% 4.01% n.a. 5.69%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-0.10% -3.20% -13.63% -13.63% -8.98% 4.59% n.a. 9.14% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
2.83% 1.95% 0.34% 0.34% -4.22% 3.99% n.a. 7.89%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-0.72% -3.69% -11.87% -11.87% -7.99% n.a. n.a. -1.04% 31/07/2020
MSCI All Country Asia ex Japan Index (EUR)
2.28% 2.05% 2.74% 2.74% -3.18% n.a. n.a. 1.77%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016
Matthews Asia ex Japan Total Return Equity Fund (USD)
-8.71% -26.05% 3.96% 51.86% 16.73% -12.37% 47.29% 6.89%
MSCI All Country Asia ex Japan Index (USD)
6.34% -19.36% -4.46% 25.36% 18.52% -14.12% 42.08% 5.76%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-13.63% -17.12% 5.36% 46.62% 13.21% -7.38% 34.23% 28.50%
MSCI All Country Asia ex Japan Index (GBP)
0.34% -9.19% -3.58% 21.49% 13.94% -8.78% 29.78% 26.15%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-11.87% -21.56% 12.67% n.a. n.a. n.a. n.a. n.a.
MSCI All Country Asia ex Japan Index (EUR)
2.74% -14.07% 2.79% n.a. n.a. n.a. n.a. n.a.
For the period ended 31/12/2023
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
-8.71% -26.05% 3.96% 51.86% 16.73% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
6.34% -19.36% -4.46% 25.36% 18.52%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-13.63% -17.12% 5.36% 46.62% 13.21% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
0.34% -9.19% -3.58% 21.49% 13.94%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-11.87% -21.56% 12.67% n.a. n.a. 31/07/2020
MSCI All Country Asia ex Japan Index (EUR)
2.74% -14.07% 2.79% 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.

Yield

(as of 31/01/2024)
2.41% Dividend Yield

Source: FactSet Research Systems, Bloomberg, Matthews Asia

Portfolio Characteristics

(as of 31/01/2024)
Fund Benchmark
Number of Positions 37 1,248
Weighted Average Market Cap $152.9 billion $116.8 billion
Active Share 75.1 n.a.
P/E using FY1 estimates 13.6x 12.8x
P/E using FY2 estimates 11.7x 11.3x
Price/Cash Flow 9.7 6.8
Price/Book 2.3 1.5
Return On Equity 17.6 14.2
EPS Growth (3 Yr) 3.9% 14.0%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/12/2023)
-6.00%
Alpha
0.87
Beta
71.19%
Upside Capture
100.34%
Downside Capture
-0.75
Sharpe Ratio
-0.63
Information Ratio
7.52%
Tracking Error
84.38

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

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 31/01/2024)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 12.7
Tencent Holdings, Ltd. Communication Services China/Hong Kong 6.8
Samsung Electronics Co., Ltd. Information Technology South Korea 6.5
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 4.7
HDFC Bank, Ltd. Financials India 4.4
PT Bank Rakyat Indonesia Persero Tbk Financials Indonesia 3.7
AIA Group, Ltd. Financials China/Hong Kong 3.7
DBS Group Holdings, Ltd. Financials Singapore 3.4
ICICI Bank, Ltd. Financials India 3.3
FPT Corp. Information Technology Vietnam 3.2
TOTAL 52.4

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
  • Asset Type Breakdown
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 36.6 25.9 10.7
Financials 26.9 21.1 5.8
Consumer Discretionary 16.9 13.3 3.6
Communication Services 7.6 9.1 -1.5
Industrials 6.4 7.6 -1.2
Consumer Staples 3.8 4.7 -0.9
Health Care 2.7 3.8 -1.1
Utilities 1.4 2.8 -1.4
Materials 0.0 4.8 -4.8
Energy 0.0 4.2 -4.2
Real Estate 0.0 3.0 -3.0
Liabilities in Excess of Cash and Other Assets -2.3 0.0 -2.3

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 32.5 34.6 -2.1
Taiwan 19.8 19.3 0.5
India 17.4 21.1 -3.7
South Korea 11.9 14.4 -2.5
Vietnam 6.1 0.0 6.1
Singapore 4.8 3.8 1.0
Indonesia 3.7 2.3 1.4
Malaysia 3.4 1.6 1.8
Thailand 2.7 2.0 0.7
Philippines 0.0 0.8 -0.8
Macau 0.0 0.2 -0.2
Liabilities in Excess of Cash and Other Assets -2.3 0.0 -2.3

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

Asset Type Fund
Common Equities and ADRs 102.3
Liabilities in Excess of Cash and Other Assets -2.3
Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 70.2 56.6 13.6
Large Cap ($10B-$25B) 10.9 22.7 -11.8
Mid Cap ($3B-$10B) 11.6 18.8 -7.2
Small Cap (under $3B) 9.6 1.8 7.8
Liabilities in Excess of Cash and Other Assets -2.3 0.0 -2.3

Source: FactSet Research Systems.

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: 100%
0.0 0.5 -0.5
Tobacco
Fund Coverage: 96% Benchmark Coverage: 100%
0.0 0.4 -0.4
Name Fund Benchmark Difference
UN Global Compact Violators
Fund Coverage: 100% Benchmark Coverage: 100%
0.0 0.9 -0.9
Board Diversity
Fund Coverage: 100% Benchmark Coverage: 100%
19.8 17.6 2.2

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: 100%; Benchmark Coverage: 98% 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.

Ratings

  • OVERALL
  • 3 YEAR
  • 5 YEAR

Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.

Overall Morningstar RatingTM is reflective of the noted share class. Fund ratings represent an opinion only and are not a recommendation to buy or sell any fund. Copyright ©2023 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is provided for reference purposes only.

The Overall Morningstar®️ Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.

Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Portfolio Managers

Sean  Taylor photo
Sean Taylor

Lead Manager

Inbok  Song photo
Inbok Song

Lead Manager

Sherwood  Zhang, CFA photo
Sherwood Zhang, CFA

Co-Manager

Jeremy  Sutch, CFA photo
Jeremy Sutch, CFA

Co-Manager

Sojung  Park photo
Sojung Park

Co-Manager

Commentary

Period ended 31 December 2023

For the year ending 31 December 2023, the Matthews Asia ex Japan Total Return Equity Fund returned -8.71%, while its benchmark, the MSCI All Country Asia ex Japan Index returned 6.34%. For the fourth quarter of the year, the Fund returned 0.47% versus 6.48% for the benchmark.

Market Environment 

Asian markets rallied during the final quarter of the year, helping drive full-year performance into positive territory although lagging behind the returns of other major geographies. The year started brightly with the hope of a strong recovery in the Chinese economy after reopening from prior COVID restrictions. This was, however, short lived with markets in China peaking in January and then ending the year down double digits. Issues such as the challenged property market, soft consumer sentiment, regulatory changes and geopolitical tensions all weighed on China. Elsewhere in the region, India was again a strong performer rising over 20% as it benefited in part from domestic capital flows and robust earnings delivery while the political and monetary outlooks also appear supportive. The technology heavy markets of South Korea and Taiwan also made meaningful gains in 2023.

Performance Contributors and Detractors

The portfolio’s stock selection in China/Hong Kong was the largest detractor to total and relative returns in 2023. China’s economic recovery has been weaker than expected and this resulted in earnings downgrades across consumer sectors and industrials. The impact of downgrades and soft investor sentiment has weighed not only on large companies but also on small companies, affecting the portfolio’s stock selection negatively. Underweights and stock selection in India and South Korea also detracted from relative performance as did stock selection in Taiwan. Conversely, the portfolio’s off-benchmark position in Vietnam was a positive contributor. 

At the sector level, stock selection in consumer discretionary was the largest detractor to total and relative returns while overweights and stock selection in industrials and health care also detracted. On the other hand, an underweight in financials was a positive contributor.  

At the holdings level, some of the largest detractors to relative performance for the year came from companies within China. Duty free retailer China Tourism Group Duty Free Corp. was the worst performer and the biggest detractor to returns due to lower than expected earnings as well as the possibility of increasing competition in its major market. Online retailer JD.com also fell significantly, given the backdrop of a soft consumer as well as rising competitive intensity in the industry. Logistics and distribution company Milkyway Chemical Supply Chain Service similarly dropped alongside weaker-than expected-earnings while consumer-oriented companies Wuliangye Yibin and Yum China detracted amid domestic macro headwinds. For Yum China, there also appear to be worries around competitive pressures.  

On the flip side, FPT, a Vietnamese IT services company, and Leeno Industrial, a South Korean manufacturer of semiconductor testing consumables, were among the large contributors to total and relative returns in the period. FPT has continued to expand in Japan and other Asia information technology (IT) services markets and Leeno’s growth has accelerated sequentially after hitting a trough last year digesting inventory cycles. Mega cap Samsung Electronics was also a large contributor to total returns.

Notable Portfolio Changes

In 2023, Portfolio Managers initiated several new positions and exited a number of existing positions in the countries like China and India. These changes were made to improve portfolio positioning in terms of earning prospects, stock level liquidity and country allocation. Recently, the portfolio has seen increased weight in India. 

Midea, a home appliance manufacturer, is one of the new positions in China. The company has made good progress in the export market and has an extensive distribution network. Steady growth coupled with an attractive valuation and dividend yield provides defensiveness, in our view, amid a challenging market environment. Among the exits, we sold Avia Avian, an Indonesian paint manufacturer and distributor, which continues to face operational challenges from the competition and volatile raw material costs.

Outlook 

Monetary policy expectations for the U.S. in 2024 have changed meaningfully in recent months, with hopes that interest rates have peaked and that cuts will return. This helped to propel markets upward as 2023 drew to a close. The trajectory of these alterations and the global demand environment will play a role in determining market movements including in Asia in the near term. China is also an important part of the equation and we continue to remain concerned about the challenges that China faces within its own economy as well as broader geopolitical tensions. While these are reasons for caution there are also reasons to be constructive, such as appealing valuations and potentially increasing policy flexibility amid a possible interest rate-cut cycle from the Fed coupled with a low earnings base that companies have potential to grow from. In India, although valuations are expensive, structural earnings growth appears intact. Technology sectors in Taiwan and South Korea are also expected to grow reasonably in 2024, supported by better inventory levels and potential resumption of strategic capex in the key areas.

The outlook for Asia appears solid although scope for volatility remains. We continue to think that a focus on investing in what we believe to be quality companies at reasonable prices that also generally provide some form of current income is well placed to deliver for clients over the long term.

Rolling 12 Month Returns For the period ended 31/12/2023 - I (Acc)
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
-8.71% -26.05% 3.96% 51.86% 16.73% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
6.34% -19.36% -4.46% 25.36% 18.52%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-13.63% -17.12% 5.36% 46.62% 13.21% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
0.34% -9.19% -3.58% 21.49% 13.94%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-11.87% -21.56% 12.67% N.A. N.A. 31/07/2020
MSCI All Country Asia ex Japan Index (EUR)
2.74% -14.07% 2.79% N.A. N.A.

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg

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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