Performance evaluation of the Matthews Asia Dividend Fund
2016 year-to-date has been great for the Matthews Asia Dividend Fund – Investor Class (MAPIX). It ranks second among the eight funds in this review. However, in the one-year period until June 24, it comes in fourth. We have graphed its performance against two combinations of ETFs: the Vanguard FTSE Pacific ETF (VPL) with the Vanguard FTSE Emerging Markets ETF (VWO) and the iShares Core MSCI Pacific ETF (IPAC) with the iShares MSCI Emerging Markets ETF (EEM).
Let’s look at what has contributed to the fund’s performance in YTD 2016.
Portfolio composition and contribution to returns
Stock picks from the consumer staples sector, the largest one in MAPIX’s holdings, have contributed the most to the fund’s superior showing in 2016 so far. Thai Beverage has been pivotal in boosting the sector. Telecom services, the fund’s third largest sector, has lagged behind staples in terms of contribution to returns. NTT DOCOMO (DCM) has been the star performer from the sector with PT Telekomunikasi Indonesia (TLK) and Chunghwa Telecom (CHT) playing important roles as well.
China’s MINTH Group has made a tremendous contribution to the consumer discretionary sector. However, it’s the only stock that’s making a meaningful contribution. Thus, negative contributions from Shenzhou International and Bridgestone (BRDCY), among a host of other stocks, have offset a lot of the positive contribution from MINTH.
Financials have troubled the fund the most, with Sumitomo Mitsui Financial Group (SMFG) leading detractors. The materials sector has been surprising, as even after forming just 4% of the portfolio, it has contributed the second highest amount of negative returns. Korea’s LG Chem has singlehandedly driven the sector down.
MAPIX has done well given that its sectoral allocation and dividend-focused strategy has worked in the difficult times of 2016. Though the fund stands second in terms of point-to-point returns in YTD 2016, it comes in first if we look at total returns. Its dividend payouts have ensured good returns to investors. The fund’s stock-picking ability is showcased in its return performance.
These uncertain times are good for a dividend-focused strategy, and MAPIX scores points for being the only fund investing in this region that focuses on income generation. The fund is a good option for investing in Asia-Pacific.
Let’s now move on to the Matthews Asia Growth Fund – Investor Class (MPACX).