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Matthews Asia Innovators Fund
MATFX

Snapshot
  • High-conviction, concentrated equity portfolio of innovative companies in Asia
  • All-cap fundamental approach focused on companies with unique offerings that create or expand markets
  • Capitalizing on the new economy and the rising disposable income in Asia

12/27/1999

Inception Date

19.26%

YTD Return

(as of 10/30/2024)

$13.25

NAV

(as of 10/30/2024)

-0.12

1 Day NAV Change

(as of 10/30/2024)

Objective

Long-term capital appreciation

Strategy

Under normal circumstances, the Matthews Asia Innovators Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment purposes, in the common and preferred stocks of companies located in Asia that Matthews believes are innovators in their products, services, processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets. The Fund seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information; number of employees; size and stability of cash flow; management’s depth, adaptability and integrity; product lines; marketing strategies; corporate governance; and financial health.

Risks

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging and frontier markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Sector funds may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific sector. The Fund's value may be affected by changes in the science and technology-related industries.

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

Fund Facts
Inception Date 12/27/1999
Fund Assets $319.32 million (09/30/2024)
Currency USD
Ticker MATFX
Cusip 577-130-883
Portfolio Turnover 248.2%
Benchmark MSCI All Country Asia ex Japan Index
Geographic Focus Asia ex Japan - Consists of all countries and markets in Asia excluding Japan, but including all other developed, emerging, and frontier countries and markets in the Asian region
Fees & Expenses
Gross Expense Ratio 1.15%

Performance

  • Monthly
  • Quarterly
  • Calendar Year
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As of 09/30/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund - MATFX
12/27/1999
MATFX
6.69% 5.02% 20.61% 27.99% -6.01% 10.35% 8.27% 4.86%
MSCI All Country Asia ex Japan Index
8.47% 10.55% 21.52% 29.39% 0.98% 6.90% 5.71% 6.12%
As of 09/30/2024
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews Asia Innovators Fund - MATFX
12/27/1999
MATFX
6.69% 5.02% 20.61% 27.99% -6.01% 10.35% 8.27% 4.86%
MSCI All Country Asia ex Japan Index
8.47% 10.55% 21.52% 29.39% 0.98% 6.90% 5.71% 6.12%
For the years ended December 31st
Name 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Matthews Asia Innovators Fund - MATFX
MATFX
-1.77% -24.80% -13.10% 86.72% 29.60% -18.62% 52.88% -9.10% 4.48% 9.24%
MSCI All Country Asia ex Japan Index (USD)
6.34% -19.36% -4.46% 25.36% 18.52% -14.12% 42.08% 5.76% -8.90% 5.11%

MSCI AC Asia Ex Japan Index since inception value calculated from 12/31/99.

Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.

Assumes reinvestment of all dividends and/or distributions before taxes. All performance quoted represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate with market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund’s fees and expenses had not been waived. Performance differences between the Institutional class and the Investor class may arise due to differences in fees charged to each class.

Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.

Growth of a Hypothetical $10,000 Investment Since Inception

(as of 06/30/2024)

Source: BNY Mellon Investment Servicing (US) Inc. All performance is in US$.

The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on dividends, capital gain distributions or redemption of fund shares.

Ratings

  • OVERALL
  • out of 43 funds
  • 3 YEAR
  • out of 43 funds
  • 5 YEAR
  • out of 39 funds
  • 10 YEAR
  • out of 29 funds
  • 1 YEAR
  • 1st
  • 4 out of 33 funds
  • 3 YEAR
  • 4th
  • 29 out of 31 funds
  • 5 YEAR
  • 1st
  • 2 out of 30 funds
  • 10 YEAR
  • 1st
  • 2 out of 20 funds
  • SINCE INCEPTION
  • 4th
  • 7 out of 8 funds

Ratings agency calculation methodology

Portfolio Managers

Michael J. Oh, CFA photo
Michael J. Oh, CFA

Lead Manager

Inbok  Song photo
Inbok Song

Co-Manager

Portfolio Characteristics

(as of 09/30/2024)
Fund Benchmark
Number of Positions 56 1,070
Weighted Average Market Cap $190.7 billion $170.6 billion
Active Share 65.2 n.a.
P/E using FY1 estimates 19.3x 14.2x
P/E using FY2 estimates 17.0x 12.7x
Price/Cash Flow 17.5 9.5
Price/Book 3.7 1.9
Return On Equity 15.3 15.0
EPS Growth (3 Yr) 17.7% 12.9%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 06/30/2024)
-4.07%
Alpha
1.15
Beta
106.28%
Upside Capture
118.23%
Downside Capture
-0.59
Sharpe Ratio
-0.56
Information Ratio
10.20%
Tracking Error
83.88

Fund Risk Metrics are reflective of Investor share class.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 09/30/2024)
Name Sector Country % Net Assets
Taiwan Semiconductor Manufacturing Co., Ltd. Information Technology Taiwan 11.0
Sea, Ltd. Communication Services Singapore 6.0
PDD Holdings, Inc. Consumer Discretionary China/Hong Kong 5.3
Tencent Holdings, Ltd. Communication Services China/Hong Kong 5.2
Zomato, Ltd. Consumer Discretionary India 4.7
Trip.com Group, Ltd. Consumer Discretionary China/Hong Kong 4.6
Alibaba Group Holding, Ltd. Consumer Discretionary China/Hong Kong 4.6
Samsung Electronics Co., Ltd. Information Technology South Korea 3.6
Meituan Class B Consumer Discretionary China/Hong Kong 3.4
MakeMyTrip, Ltd. Consumer Discretionary India 2.9
TOTAL 51.3

Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.

Source: BNY Mellon Investment Servicing (US) Inc.

Portfolio Breakdown (%)

(as of 09/30/2024)
  • Sector Allocation
  • Country Allocation
  • Market Cap Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 32.6 15.0 17.6
Information Technology 30.2 25.1 5.1
Communication Services 15.7 10.1 5.6
Financials 8.4 21.1 -12.7
Industrials 6.0 7.5 -1.5
Health Care 2.2 3.7 -1.5
Real Estate 2.2 2.4 -0.2
Energy 1.8 3.6 -1.8
Consumer Staples 1.2 4.3 -3.1
Materials 0.0 4.5 -4.5
Utilities 0.0 2.8 -2.8
Liabilities in Excess of Cash and Other Assets -0.2 0.0 -0.2

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 37.8 36.5 1.3
India 24.6 22.2 2.4
Taiwan 15.1 19.8 -4.7
South Korea 8.5 11.9 -3.4
Singapore 8.2 3.6 4.6
Macau 1.6 0.2 1.4
Vietnam 1.6 0.0 1.6
Indonesia 1.4 1.9 -0.5
United States 1.0 0.0 1.0
Brazil 0.5 0.0 0.5
Malaysia 0.0 1.7 -1.7
Thailand 0.0 1.7 -1.7
Philippines 0.0 0.6 -0.6
Liabilities in Excess of Cash and Other Assets -0.2 0.0 -0.2

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 73.0 63.8 9.2
Large Cap ($10B-$25B) 13.3 21.7 -8.4
Mid Cap ($3B-$10B) 10.6 14.3 -3.7
Small Cap (under $3B) 3.4 0.2 3.2
Liabilities in Excess of Cash and Other Assets -0.2 0.0 -0.2

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.

Distributions

Record Date Ex, Pay and
Reinvest Date
Ordinary
Income
Short Term
Capital Gains
Long Term
Capital Gains
Total Distributions
Per Share
% of NAV Nondividend Distribution (Return of Capital)
12/13/2023 12/14/2023 $0.00018 $0.00000 $0.00000 $0.00018 0.0% N.A.
12/13/2022 12/14/2022 $0.00000 $0.00000 $3.00231 $3.00231 20.4% N.A.
12/14/2021 12/15/2021 $0.00000 $1.10849 $3.22827 $4.33676 18.4% N.A.
12/15/2020 12/16/2020 $0.00000 $0.13545 $0.31069 $0.44614 1.8% N.A.
12/16/2019 12/17/2019 $0.00000 $0.00000 $0.04272 $0.04272 0.3% N.A.

 

There is no guarantee that the Fund will pay or continue to pay distributions. 

Past performance is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost.

Commentary

Period ended September 30, 2024

Market Environment

  • Many markets in Asia performed strongly despite volatility generated by concerns over a U.S. slowdown, China’s economy and rising interest rates in Japan. Toward the end of the quarter, the Federal Reserve’s 50 basis point (O.50%) interest rate cut, and expectations of further cuts, boosted markets.
  • India’s equity market delivered a robust performance supported by earnings growth. The market is expensive but economic growth rates remain high. Following the formation of a coalition government after the election there are also signs that growth is becoming more balanced to include services and consumption as well as infrastructure and industry.
  • In North Asia, Taiwan’s technology-heavy market was challenged despite the potential growth opportunities that artificial intelligence (AI)-linked segments offer, in part as prior performance had been strong and as questions arose over valuations. South Korea’s market was a weak performer with semiconductor stocks particularly soft.
  • China’s economy continued to struggle with weak consumer sentiment and declining property prices. Toward the end of the quarter its markets rallied after the central bank launched a broad stimulus package with measures to add liquidity, aid the property market, and boost equity markets.

Contributors and Detractors

  • For the quarter ended September 30, 2024, the Matthews Asia Innovators Fund returned 5.02%, (Investor Class) and 5.09% (Institutional Class) while its benchmark, the MSCI All Country Asia ex Japan Index, returned 10.55% over the same period.
  • On a country basis, the top three contributors to relative performance were India and Singapore due to stock selection and the U.S. due to an off-benchmark allocation. The top three detractors were China/Hong Kong, Taiwan and South Korea due to stock selection.
  • On a sector basis, the top three contributors to relative performance were communication services and health care due to stock selection and materials due to zero allocation. The top three detractors were information technology (IT) due to stock selection, financials and consumer staples due to an underweight allocation.
  • The largest contributors to absolute performance included Sea, a Singapore-based provider of PC and mobile digital content, Zomato, a leading Indian online restaurant booking and food delivery company, and Alibaba Group, the largest e-commerce platform company in China. The top three detractors included Samsung Electronics, a South Korean semiconductor and consumer electronics maker, SK Hynix, a Korean semiconductor company, and Lam Research, a U.S. semiconductor equipment manufacturer.

Outlook

  • The Fed’s rate cut will, we think, provide an impetus for a number of central banks in Asia to cut their own rates which should be favorable for businesses and economies. We think this is a significant turning point particularly for economies in the region. Fed rate cuts typically also bring downward pressure on the U.S. dollar which is often also a tailwind.
  • For some markets, U.S. rates cuts will have less of an impact. Taiwanese equities, for example, have already gained from the AI boom and valuations are now a little stretched. In contrast, the rate-sensitive economies of Southeast Asia, which are building out data centers to support global adoption of AI, are positioned to gain from U.S. monetary easing in our view.
  • In China, it will take time to see if the stimulus measures provide a sustainable catalyst for recovery. Overall, we expect volatility to continue across the region, particularly as we approach and pass through the U.S. election.

 

View the Fund’s Top 10 holdings as of September 30, 2024. Current and future holdings are subject to change and risk.

Average Annual Total Returns - MATFX as of 09/30/2024
1YR 3YR 5YR 10YR Since Inception Inception Date
27.99% -6.01% 10.35% 8.27% 4.86% 12/27/1999

All performance quoted is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns would have been lower if certain of the Fund's fees and expenses had not been waived. For the Fund's most recent month-end performance visit matthewsasia.com

Fees & Expenses
Gross Expense Ratio 1.15%

Investments in Asian securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging and frontier markets involves different and greater risks, as these countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets. Sector funds may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific sector. The Fund's value may be affected by changes in the science and technology-related industries.

 

Visit our Glossary of Terms page for definitions and additional information.

Index Definitions

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. Neither the funds nor the Investment Advisor accept any liability for losses either direct or consequential caused by the use of this information.

The views and opinions in the commentary were as of the report date, subject to change and may not reflect 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.