Best Fund Provider – Greater China Equity
We are delighted to have been awarded Asian Private Banker’s Best Fund Provider – Greater China Equity in its 2021 Asset Management Awards for Excellence.
With close to 30 years of investment experience, Matthews Asia seeks to champion Asia-focused investment solutions that build wealth for our clients. Small-cap companies are at the forefront of the shift of China’s economy from manufacturing towards innovation, consumption, and services.
Today, China’s small companies are driving “New Economy” industries such as healthcare, software services/technology, and semi-conductors — areas that are under-represented in large-cap oriented benchmarks or portfolios.
The Matthews China Small Companies Fund seeks to provide investors with access to some of the fastest growing segments of China’s “New Economy”. We believe that many of these small cap companies have the potential to become industry leaders of tomorrow within China and beyond, which will provide ample opportunities for investors over time.
Matthews Asia, a manager synonymous with the ultra-competitive China equity space, offers a genuinely differentiated solutions suite for investors to harness what is arguably the most important story of this generation — and excels at doing so.
The firm’s flagship Matthews China Small Companies Fund, one of three dedicated China strategies, stands out from peers’ offerings on a number of fronts. By virtue of its small-cap focus, the strategy — which provides investors with exposure to the drivers of China’s evolving economy — avoids large-cap household names that underpin rival funds by focusing on companies that epitomise entrepreneurship, innovation, and the drive to promote domestic consumption, and that have the potential and aspiration to become tomorrow’s dominant players in their respective sectors.
The fund is the only small-cap China-focused fund with a five-year track record, crucially delivering consistent outperformance versus peers and benchmark across various time frames, and ranking second out of 99 China equity funds in terms of absolute returns on a year-to-date basis (as of 31 August 2020) as at the time of deliberation and within the Morningstar universe of China equity funds.
Unquestionably, Matthews Asia’s prowess derives from its vast experience in following the Chinese market, having launched its first China strategy in 1998. In 2014, it acquired a QFII licence and quota, and the firm has participated in A-shares via China’s Stock Connect programmes. As at the time of deliberation, Matthews Asia managed over US$8.6 billion in China equities across the firm’s single country and regional equity strategies, of which US$2.3 billion was invested in China A-shares through its QFII and Stock Connect programmes.
The team behind Matthews Asia’s stable of China strategies employ a strict fundamental, bottom-up selection process with an emphasis on companies with long-term growth prospects, quality managements and reasonable valuations — attributes critical in the small-cap segment. The rigour of the firm’s approach is all the more important since the majority of the universe Matthews Asia tracks is not covered by sell-side analysts, thereby raising the bar for competitors and ensuring that portfolio construction is high-conviction and reasonably concentrated. Indeed, Matthews Asia specialises in looking beyond indices and headlines to focus on what it believes are the attributes that make today’s small-caps tomorrow’s stars.
This approach is made possible by the firm’s deep roots and experience in China. Over half of Matthews Asia’s investment professionals have lived or worked in China and speak at least one Chinese dialect.
The effectiveness of Matthews Asia’s approach and philosophy was well-evidenced in 2020 — a year dominated by the spread of and disruption caused by the COVID-19 pandemic and ongoing US-China tensions. Its flagship Matthews China Small Companies Fund benefited from structural exposure to healthcare and pharmaceutical, and software services companies, as well as its thematic focus on China’s self-sufficiency.
2020 was a year in which fund houses had to offer their private banking partners a close and intensive service. Accordingly, Matthews Asia’s team of three sales individuals dedicated to Asia’s private banking community excelled as points of access and facilitators for connectivity between clients and the firm’s portfolio management team and investment strategists. The firm prioritised regular and incisive commentaries and portfolio updates beyond the ordinary, as epitomised by its Sinology Series publication that covers China from a macro and geopolitical perspective.
Its commitment to the China markets vindicated once again by strong net inflows via an ever-expanding register of private banking partners in Asia, Matthews Asia is Asian Private Banker’s Best Fund Provider Greater China Equity for 2021.