Performance evaluation of the Matthews Asian Growth and Income Fund

The three-month period ended June 24, 2016, has been challenging for the Matthews Asian Growth and Income Fund Investor Class (MACSX). However, apart from that, the fund has been a top performer. It stands third YTD (year-to-date) in 2016 among the funds under review.

We’ve graphed the fund’s performance against the iShares MSCI All Country Asia ex Japan ETF (AAXJ) and the WisdomTree Asia Pacific ex-Japan ETF (AXJL). Let’s look at what has contributed to its good performance in 2016.

How MACSX’s Stock Picks Have Delivered in 2016

Portfolio composition and contribution to returns

Telecommunications services have been the most beneficial sector to MACSX YTD in 2016. Telekom Indonesia (TLK) has been the star performer from the sector. Other major contributors include Chunghwa Telecom Company (CHT) and KDDI.

Information technology has been another major sectoral contributor. All stocks from the sector have contributed positively to the fund so far in the year. Both common stocks and sponsored ADRs (American depositary receipt) of Taiwan Semiconductor Manufacturing Company (TSM) have tremendously helped the sector.

Yum! Brands (YUM) has helped the consumer discretionary sector up. Korea Tobacco & Ginseng and Japan Tobacco (JAPAY) have buoyed the consumer staples sector.

Industrials have dragged MACSX down the most. CK Hutchison Holdings has led the sector down. However, positive contributions from Jardine Matheson Holdings have been helpful in reducing the sector’s overall negative performance.

Financials is the only other sector that has contributed negatively to the fund. HSBC Holdings (HSBC) has been the biggest detractor.

Investor takeaway

MACSX’s portfolio turnover is very low. This shows the conviction of the fund’s managers in their stock choices. The fund’s superior performance is also a testament to its excellent stock picks.

Given its dual income of growth and income generation, the fund has done a great job. If investing in Asia, there’s little reason not to consider MACSX as a possible investment option.

Let’s move on to the Matthews Pacific Tiger Fund Investor Class (MAPTX).

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