uploads///Portfolio Breakdown of the MACSX

Bringing You Up to Date on MACSX’s 2016 Portfolio Moves

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Jul. 1 2016, Published 7:08 p.m. ET

Matthews Asian Growth and Income Fund overview

The Matthews Asian Growth and Income Fund (MACSX) aims to invest at least 80% of its assets in “dividend-paying common stock, preferred stock and other equity securities, and convertible securities as well as fixed income securities, of any duration or quality, of companies located in Asia, which consists of all countries and markets in Asia, including developed, emerging, and frontier countries and markets in the Asian region.”

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The fund’s dual focus on growth and income generation makes it a bit different from the other funds in this review. The fund’s literature says that it attempts to provide downside protection compared to a fund invested purely in common stocks. By investing in convertible bonds and dividend stocks, the fund aims to achieve its investment objective and to reduce the volatility of its returns.

The fund’s assets were spread across 59 securities in March 2016, and it was managing assets worth $2.9 billion in May. As of March, its equity holdings included Yum! Brands (YUM), Japan Tobacco (JAPAY), HSBC Holdings (HSBC), ResMed (RMD), and Chunghwa Telecom Company (CHT).

Portfolio changes in the Matthews Asian Growth and Income Fund

MACSX is quite balanced in terms of its sectoral composition. The top four sectors form 15.6%–16.8% each of the fund. Industrials is the most invested sector, closely followed by financials. Consumer discretionary edges out telecommunications services for the third position. The fund isn’t invested in the materials or energy sectors.

Compared to the MSCI All Country Asia ex Japan Index, MACSX is overweight in the industrials, consumer discretionary, telecommunication services, and consumer staples sectors. Meanwhile, it’s underweight in the financials and information technology sectors.

Stocks from China and Hong Kong combined form 32% of MACSX’s portfolio. Singaporean equities are a distant second, followed by South Korean equities.

In the 12-month period ended May 2016, the fund’s allocations to healthcare, industrials, information technology, telecommunications services, and utilities have risen. Its exposure to the consumer staples sector has fallen compared to a year ago. The fund’s managers exited the energy sector in 2Q15 and the materials sector in 4Q15.

A distinctive characteristic of the fund is its low portfolio turnover, which shows the conviction of its managers in their stock picks.

With this portfolio positioning, how has MACSX fared YTD in 2016, and why? Let’s look at that in the next article.

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