04/30/2020
Inception Date
-0.08%
YTD Return
(as of 04/22/2025)
$13.05
NAV
(as of 04/22/2025)
+0.20
1 Day NAV Change
(as of 04/22/2025)
Lead Manager
Portfolio Manager
Alex Zarechnak is a Portfolio Manager at Matthews and manages the firm’s Emerging Markets Equity and Emerging Markets ex China Strategies and co-manages the Emerging Markets Small Companies and Emerging Markets Discovery Strategies. Prior to joining the firm in 2020, he spent a total of 15 years (1998 – 2006 and 2012 – 2019) at Wellington Management as an analyst for the firm’s flagship Emerging Markets Equity fund as a generalist first covering CEEMEA, then Latin America. From 2006-2012, he was a regional equity analyst at Capital Group, covering Emerging Markets with a focus on energy, telecoms and consumer sectors in Latin America and CEEMEA. Alex began his Emerging Markets career as a Russia equity analyst with Templeton Emerging Markets, based in Moscow. He earned a B.A. in Economics and Government from the College of William & Mary. Alex is fluent in Russian.
Co-Manager
Portfolio Manager
Andrew Mattock is a Portfolio Manager at Matthews and manages the firm’s China, China Small Companies, China A-Share and China Discovery Strategies and co-manages the Pacific Tiger, China Dividend and Emerging Markets Equity Strategies. Prior to joining Matthews in 2015, he was a Fund Manager at Henderson Global Investors for 15 years, first in London and then in Singapore, managing Asia Pacific equities. Andrew holds a Bachelor of Business majoring in Accounting from ACU. He began his career at PricewaterhouseCoopers and qualified as a Chartered Accountant.
Co-Manager
Portfolio Manager
Peeyush Mittal is a Portfolio Manager at Matthews and manages the firm’s India Strategy and co-manages the Emerging Markets Equity, Emerging Markets ex China, Asia Growth and Pacific Tiger Strategies. Prior to joining the Matthews in 2015, he spent over three years at Franklin Templeton Asset Management India, most recently as a Senior Research Analyst. Previously, he was with Deutsche Asset & Wealth Management New York, from 2009 to 2011, researching U.S. and European stocks in the industrials and materials sectors. Peeyush began his career in 2003 with Scot Forge as an Industrial Engineer, and was responsible for implementing Lean Manufacturing systems on the production shop floor. Peeyush earned his M.B.A from The University of Chicago Booth School of Business. He received a Master of Science in Industrial Engineering from The Ohio State University and received a Bachelor of Technology in Metallurgical Engineering from The Indian Institute of Technology Madras. He is fluent in Hindi.
Co-Manager
Chief Investment Officer and Portfolio Manager
Sean Taylor is Chief Investment Officer and Portfolio Manager at Matthews. As Chief Investment Officer, Sean oversees the firm’s investment process and investment professionals and sets the research agenda for the investment team. He manages the firm’s Pacific Tiger and Asia ex Japan Total Return Equity Strategies and co-manages the firm’s Emerging Markets Equity and Emerging Markets ex China Strategies. Prior to joining Matthews in October 2023, he was Chief Investment Officer APAC, Global Head of Emerging Markets Equity at DWS Group based in Hong Kong since he joined the company in 2013. From 2004 to 2011, he was an Investment Director at GAM, based in London and Dubai. From 1997 to 2004, he was at Societe Generale as Head of International and Emerging Markets. Sean has 30 years of experience, including more than a decade as CIO. He oversaw a number of emerging markets active strategies, including Latin America, India, China, Brazil, Russia as well as international and global strategies. He received his MBA from Manchester Business School and is a graduate of the Royal Military Academy, Sandhurst.
Co-Manager
Portfolio Manager
Jeremy Sutch is a Portfolio Manager at Matthews and co-manages the firm’s Emerging Markets Equity, Emerging Markets ex China Equity, Emerging Markets Small Companies, Emerging Markets Discovery, Asia Small Companies, Asia ex Japan Total Return Equity and Pacific Tiger Strategies. Prior to joining Matthews in 2015, he was Director and Global Head of Emerging Companies at Standard Chartered Bank in Hong Kong from 2012 to 2015, responsible for the fundamental analysis of companies in Asia, with a particular focus on small- and mid-capitalization companies. From 2009 to 2012, he was Managing Director at MJP Capital in Hong Kong, which he co-founded. His prior experience has included managing small-cap equities at Indus Capital Advisors and serving as Head of Hong Kong Research for ABN AMRO Asia Securities. Jeremy earned an M.A. in French and History from the University of Edinburgh.
Commentary
Period ended December 31, 2023
For the year ending December 31, 2023, the Matthews Emerging Markets Equity Fund returned 8.43% (Investor Class) and 8.63% (Institutional Class), while its benchmark, the MSCI Emerging Markets Index, returned 10.27% over the same period. For the fourth quarter, the Fund returned 7.37% (Investor Class) and 7.47% (Institutional Class), while the benchmark returned 7.93%.
Market Environment
2023 was challenging for emerging markets on a number of levels. At the macro level, rising interest rates and a strong U.S. dollar were headwinds while geopolitical tensions between the U.S. and China remained elevated and continued to be a significant drag on international sentiment toward China. Another notable trait of the year was the prolonged weakness of the Chinese economy. The rapid post-COVID recovery that many investors expected didn’t materialize and the country struggled with a lack of confidence and problems in specific sectors like real estate. Mitigating China’s woes somewhat was India’s continued resilient growth, supported in part by its domestic infrastructure programs and increasing global trade. Toward the end of the year, there was a general consensus that inflation had peaked in the global economy and that the U.S. Federal Reserve would pivot toward cutting rates in 2024.
It is also encouraging to reflect on the economic conditions of most emerging markets coming out of the pandemic. COVID was a ‘stress test’ that most of these markets passed as far as macroeconomic policy and financial conditions are concerned. Emerging markets stimulated less fiscally and monetarily compared with developed markets and that left them with lower relative debt levels and more monetary policy credibility.
Performance Contributors and Detractors
At the regional level, our overweight and stock selection in Mexico was the biggest contributor to total and relative returns in 2023, benefiting from gains in real estate, cement and banking stocks. An underweight to China also supported relative performance, as did our off-benchmark positions in Vietnam and the U.S., the latter buoyed by semiconductor equipment and enterprise software positions. On the other hand, stock selection in India was the biggest detractor to relative returns. We think we got our India allocation decision right, but poor stock selection more than offset that. Our underweight in technology companies in Taiwan and underweight and stock selection in South Korea also detracted.
At the sector level, stock selection in real estate contributed the most to relative returns in the period. An overweight to IT also contributed, as did an underweight and stock selection in consumer staples. In contrast, stock selection in consumer discretionary was the biggest detractor to relative performance due to holdings in China. Stock selection in energy also impacted relative returns.
At the holdings level, Prologis Property Mexico, a Mexican real estate developer, FPT Corp., a Vietnamese IT services company, Banco BTG Pactual, a Brazilian investment bank and Globant, an enterprise software company with coders located throughout emerging markets, were among the top contributors to total and relative returns in 2023. Prologis benefited from the growing demand for quality warehouse space in Mexico, driven partly by re-shoring of supply chains from Asia. Globant bucked the trend of weaker enterprise software demand by nimbly emphasizing new verticals, like sports and entertainment, and leaning into vibrant geographies like Latin America and the Middle East. On the other hand, Chinese e-commerce company JD.com was the biggest detractor to total returns and was among the biggest detractors to relative returns. The company struggled against the backdrop of weak consumption as well as rising competitive intensity in the industry. First Quantum Minerals, a Canadian-based miner with global operations, also detracted, following a forced shutdown of its copper mine in Panama after countrywide protests. We exited that position toward the end of the year. Asia focused insurers AIA Group and Prudential also declined in 2023.
Notable Portfolio Changes
The portfolio added a number of new positions, including Emaar Properties, a real estate developer in Dubai, and Prio, a Brazilian oil and gas producer. Emaar will benefit, we believe, as Dubai’s reforms attract capital and stimulate economic growth. Prio is building a strong oil production business, in our view, by buying and rehabilitating fields which larger companies no longer want. On the flip side, we sold positions in companies including First Quantum, CapitaLand, a real estate investment trust in Singapore, and Bangkok Dusit Medical Services (BDMS), a hospital operator.
Outlook
We continue to find many attractive emerging markets companies to consider for the portfolio. Even in uncertain times they are solving problems for their societies, or creating value for their customers. Inflation in emerging markets is also on the way down, and interest rate cuts around the world this year could help overall liquidity conditions. Near-shoring and ‘China+1’ trends also continue to benefit countries in Southeast Asia, Central Europe and Latin America. In the Middle East, the landscape has been changing as Saudi Arabia and the United Arab Emirates diversify away from oil. In Asia, we believe economies are finding their feet post COVID and we expect some cyclical growth to return. We also see opportunities coming from domestic structural drivers like infrastructure spend in certain markets, notably India, and these could help counter any slowdown in global trade and economic activity.
Top 10 holdings as of December 31, 2023. Current and future holdings are subject to change and risk.
Average Annual Total Returns - MEGMX as of 12/31/2024
Fees & Expenses
Matthews has contractually agreed to waive fees and reimburse expenses to limit the Total Annual Fund Operating Expenses until April 30, 2026. Please see the Fund’s prospectus for additional details.
Investments in emerging and frontier securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Additionally, investing in emerging and frontier markets countries are substantially smaller, less liquid and more volatile than securities markets in more developed markets.