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Matthews Asia ex Japan Total Return Equity Fund

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

-10.95%

YTD Return (USD)

(as of 04/10/2023)

$16.76

NAV (USD)

(as of 04/10/2023)

-0.11

1 Day NAV Change

(as of 04/10/2023)

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 $384.86 million (31/08/2023)
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 31/08/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
-7.14% -2.53% -6.00% -16.28% -4.06% 3.26% n.a. 7.64% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
-6.39% 2.21% 2.59% -0.24% -2.60% 1.15% n.a. 5.45%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-5.80% -4.99% -10.82% -23.24% -2.45% 3.75% n.a. 10.01% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
-4.95% -0.03% -2.61% -8.39% -0.79% 1.66% n.a. 7.82%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-5.78% -4.26% -7.67% -22.94% -1.00% n.a. n.a. 0.36% 31/07/2020
As of 30/06/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
2.31% -3.88% -1.33% -11.82% 1.44% 3.91% n.a. 8.51% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
2.81% -1.14% 3.19% -0.76% 1.49% 1.25% n.a. 5.66%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
0.00% -5.97% -6.13% -15.59% 0.43% 4.73% n.a. 10.99% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
0.22% -3.86% -2.36% -5.20% 0.53% 2.02% n.a. 8.04%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
0.66% -3.71% -2.92% -15.57% n.a. n.a. n.a. 2.12% 31/07/2020
MSCI All Country Asia ex Japan Index (EUR)
0.46% -1.56% 0.95% -4.90% n.a. n.a. n.a. 1.47%
For the years ended December 31st
Name 2022 2021 2020 2019 2018 2017 2016
Matthews Asia ex Japan Total Return Equity Fund (USD)
-26.05% 3.96% 51.86% 16.73% -12.37% 47.29% 6.89%
MSCI All Country Asia ex Japan Index (USD)
-19.36% -4.46% 25.36% 18.52% -14.12% 42.08% 5.76%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-17.12% 5.36% 46.62% 13.21% -7.38% 34.23% 28.50%
MSCI All Country Asia ex Japan Index (GBP)
-9.19% -3.58% 21.49% 13.94% -8.78% 29.78% 26.15%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-21.56% 12.67% n.a. n.a. n.a. n.a. n.a.
MSCI All Country Asia ex Japan Index (EUR)
-14.07% 2.79% n.a. n.a. n.a. n.a. n.a.
For the period ended 30/06/2023
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
-11.82% -21.42% 50.65% 14.11% 1.70% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
-0.76% -24.78% 40.03% 1.97% -0.18%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-15.59% -10.03% 33.36% 18.00% 5.43% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
-5.20% -14.44% 25.25% 5.03% 3.55%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-15.57% -10.07% n.a. n.a. n.a. 31/07/2020
MSCI All Country Asia ex Japan Index (EUR)
-4.90% -14.68% n.a. n.a. n.a.

Source: Brown Brothers Harriman (Luxembourg) S.C.A.

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 31/08/2023)
2.41% Dividend Yield

Source: FactSet Research Systems, Bloomberg, Matthews Asia

Portfolio Characteristics

(as of 31/08/2023)
Fund Benchmark
Number of Positions 44 1,227
Weighted Average Market Cap $88.0 billion $109.9 billion
Active Share 78.2 n.a.
P/E using FY1 estimates 17.0x 13.4x
P/E using FY2 estimates 14.1x 11.6x
Price/Cash Flow 11.0 6.8
Price/Book 2.8 1.4
Return On Equity 22.0 15.1
EPS Growth (3 Yr) 16.7% 18.2%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/08/2023)
-1.75%
Alpha
0.91
Beta
84.18%
Upside Capture
95.50%
Downside Capture
-0.30
Sharpe Ratio
-0.19
Information Ratio
7.69%
Tracking Error
84.61

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

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 31/08/2023)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 7.6
Tencent Holdings, Ltd. Communication Services China/Hong Kong 5.1
Samsung Electronics Co., Ltd. Information Technology South Korea 3.4
PT Bank Rakyat Indonesia Persero Tbk Financials Indonesia 3.3
Asia Commercial Bank JSC Financials Vietnam 3.1
Frontken Corp Bhd Industrials Malaysia 2.8
Midea Group Co., Ltd. Consumer Discretionary China/Hong Kong 2.8
FPT Corp. Information Technology Vietnam 2.6
Minth Group, Ltd. Consumer Discretionary China/Hong Kong 2.6
AIA Group, Ltd. Financials China/Hong Kong 2.5
TOTAL 35.8

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 31/08/2023)
  • Sector Allocation
  • Country Allocation
  • Asset Type Breakdown
  • Market Cap Exposure
Sector Fund Benchmark Difference
Information Technology 24.1 23.7 0.4
Consumer Discretionary 18.5 15.1 3.4
Industrials 16.7 7.3 9.4
Financials 13.5 20.7 -7.2
Health Care 7.9 3.9 4.0
Communication Services 7.5 9.7 -2.2
Real Estate 5.4 3.3 2.1
Consumer Staples 4.2 5.1 -0.9
Materials 1.6 5.2 -3.6
Energy 0.0 3.7 -3.7
Utilities 0.0 2.4 -2.4
Cash and Other Assets, Less Liabilities 0.6 0.0 0.6

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 42.7 40.6 2.1
Taiwan 20.6 17.2 3.4
India 10.0 17.1 -7.1
South Korea 7.7 14.1 -6.4
Vietnam 5.8 0.0 5.8
Malaysia 4.7 1.6 3.1
Indonesia 4.4 2.3 2.1
Thailand 2.0 2.3 -0.3
Singapore 1.7 3.8 -2.1
Philippines 0.0 0.7 -0.7
Macau 0.0 0.3 -0.3
Cash and Other Assets, Less Liabilities 0.6 0.0 0.6

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

Asset Type Fund
Common Equities and ADRs 99.4
Cash and Other Assets, Less Liabilities 0.6
Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 39.4 59.1 -19.7
Large Cap ($10B-$25B) 3.7 19.8 -16.1
Mid Cap ($3B-$10B) 24.8 19.1 5.7
Small Cap (under $3B) 31.6 2.0 29.6
Cash and Other Assets, Less Liabilities 0.6 0.0 0.6

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 30/06/2023)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 93% Benchmark Coverage: 98%
0.0 0.4 -0.4
Tobacco
Fund Coverage: 93% 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 0.7 -0.7
Board Diversity
Fund Coverage: 100% Benchmark Coverage: 98%
20.4 17.2 3.2

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.

Source: Sustainalytics, Factset, MSCI, Matthews Asia.

GHG Intensity

(as of 30/06/2023)

Fund Coverage: 98%; Benchmark Coverage: 98% as of 30/06/2023

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 Sustainable Finance Disclosure Regulation – Article 10.

Ratings

  • OVERALL
  • 3 YEAR
  • 5 YEAR

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

The Elite RatingTMsystem is proprietary to FundCalibre Ltd, but should not be taken as a recommendation.

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

Sharat  Shroff, CFA photo
Sharat Shroff, CFA

Lead Manager

Kenneth  Lowe, CFA photo
Kenneth Lowe, CFA

Lead Manager

Inbok  Song photo
Inbok Song

Co-Manager

Sherwood  Zhang, CFA photo
Sherwood Zhang, CFA

Co-Manager

Robert J. Horrocks, PhD photo
Jeremy  Sutch, CFA photo
Jeremy Sutch, CFA

Co-Manager

Sojung  Park photo
Sojung Park

Co-Manager

Commentary

Period ended 30 June 2023

For the first half of 2023, the Matthews Asia ex Japan Total Return Equity Fund returned -1.33%, while its benchmark, the MSCI All Country Asia ex Japan Index, returned 3.19% over the same period. For the quarter ending 30 June 2023, the Fund returned -3.88%, while the benchmark returned -1.14%.

Market Environment:

2023 began with a continuation of the rally in Asian markets but a rally that quickly petered out. The remainder of the first half of the year saw a diverging performance across countries in the region. Hopes for a rapid recovery in China post reopening were disappointed with relatively weak economic data and underwhelming stimulus measures. U.S.-China political tensions also weighed on sentiment. This helped drive China/Hong Kong to be the third-weakest performing market during the period ahead of only Thailand and Malaysia. Conversely, technology-focused stocks boosted the markets of South Korea and Taiwan, driven by expectations of inventories clearing through the rest of the year as well as the long-term potential presented by artificial intelligence.

Performance Contributors and Detractors:

From a country perspective, stock selection in China/Hong Kong was the biggest detractor to relative performance in the first half as slowing industrial output and disappointing retail sales, alongside disappointing stimulus and a prolonged property downturn, weighed on equities. Stock selection was impacted as a wide array of our holdings fell. The portfolio’s underweight and stock selection in South Korea was also a detractor. On the flip side, the portfolio’s overweight and stock selection in Taiwan was the biggest contributor amid gains in holdings across varied sectors. Stock selection in Indonesia was also a contributor.

At the sector level, stock selection in consumer discretionary was the biggest detractor to performance in part reflecting subdued conditions in China. The portfolio’s overweight and stock selection in health care was also a large detractor as was stock selection in industrials. On the other hand, our underweight and stock selection in financials, stock selection in communication services and lack of exposure to utilities helped performance.

At the individual holdings level, a number of the Fund’s largest detractors came from China. JD.com, a leading ecommerce player, and China Tourism Group, a leading duty-free licensed operator, slumped given an underwhelming consumer recovery post reopening. There are also concerns over increasing competition for both in their respective sectors. Chinese health-care companies Pharmaron Beijing, an R&D service provider in the life sciences industry, and AK Medical, an orthopedic group that is a leader in artificial joints, both significantly detracted from returns.

On the other hand, a number of Taiwan holdings were among the top contributors, including E Ink and Universal Vision Biotechnology. E Ink, a leader in e-paper technology, has benefited from solid earnings growth as demand for its solutions in areas such as electronic shelf labeling remains robust. Universal Vision Biotechnology, a leading vision care group, gained as it continued to deliver healthy earnings growth amid demand for myopia control solutions and refractive treatments. Mega cap companies TSMC, Samsung Electronics and Alibaba were also top contributors to performance.

Notable Portfolio Changes:

In the last quarter there were no new positions added but we exited a number of lower conviction holdings. We exited our position in Pharmaron Beijing in the health-care sector in China, Helens International, a bar-chain operator in China, and SATS Ltd., a Singaporean provider of food solutions and gateway services, as all of these have faced earnings challenges to some extent and we believe that we can utilize the proceeds of these sales to fund better ideas. We also exited Leader Harmonious, a significant player in harmonic reducers. The stock had become overly expensive in our estimation at over 100x P/E. Taiwanese image sensor foundry provider Visera Technologies was also removed from the portfolio during the period.

Outlook:

Fears of a global recession, geopolitics and an uneven recovery in China continue to weigh on earnings growth expectations and sentiment for some of the region. The markets await clarity from the government in China on how it can increase consumer confidence and stimulate private investment. However, this uncertainty may be being priced in as the MSCI China Index trades at a fairly low multiple of 9x PE. Further, it should be remembered that a lack of inflationary pressure in China allows room for some policy easing. Elsewhere, countries like India and Indonesia continue to see healthy consumer demand while the former can benefit from the relocation of supply chains. Going forward, we continue to prefer investing in companies that allow the portfolio to balance dividend yields with dividend growth, aiming to deliver solid total returns through the economic cycle. This is a strategy that we hope is reasonably placed against what is an uncertain macroeconomic backdrop.

 

Rolling 12 Month Returns For the period ended 30/06/2023 - I (Acc)
Name 2023 2022 2021 2020 2019 Inception Date
Matthews Asia ex Japan Total Return Equity Fund (USD)
-11.82% -21.42% 50.65% 14.11% 1.70% 30/11/2015
MSCI All Country Asia ex Japan Index (USD)
-0.76% -24.78% 40.03% 1.97% -0.18%
Matthews Asia ex Japan Total Return Equity Fund (GBP)
-15.59% -10.03% 33.36% 18.00% 5.43% 30/11/2015
MSCI All Country Asia ex Japan Index (GBP)
-5.20% -14.44% 25.25% 5.03% 3.55%
Matthews Asia ex Japan Total Return Equity Fund (EUR)
-15.57% -10.07% N.A. N.A. N.A. 31/07/2020
MSCI All Country Asia ex Japan Index (EUR)
-4.90% -14.68% N.A. 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. 

Index Definitions