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Matthews Asia Pacific Tiger

Elite Rated by FundCalibre

Matthews is a specialist Asian manager based in San Francisco. This is its flagship fund, which aims to invest in high quality companies for the long term. The strategy has been running since 1994 but has only recently become available to UK investors.

Company Description

Matthews Asia was founded in 1991 by Paul Matthews and has since focused all its efforts and expertise within the Asian markets. It is the largest Asian equity specialist in the US and first made its funds available to non-US clients in 2010.

Factsheet_matthews_asia_logo

Fund Manager

Lead manager Sharat Schroff has been running the fund for seven years. Prior to this, he worked in Hong Kong and San Francisco as an equity research associate for Morgan Stanley. Rahul Gupta has co-managed this fund since April 2014.

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As long-term investors in Asia, we believe the best opportunities for wealth creation arise when market reforms, enhanced competition and rising household incomes combine to spur new and growing markets.

Sharat Shroff - Fund Manager

The Investment Process

The fund’s investment philosophy is to ignore short-term macroeconomic noise and focus entirely on the long term. Matthews is deliberately based in San Francisco to remove the day-to-day noise of the Asian markets. However, the team make regular visits to the region and see thousands of companies, including the suppliers and customers of potential stock ideas.

Matthews has a large investment team from diverse backgrounds. They have a wide range of local knowledge and speak 13 different languages between them. All fund managers sit with their team and work as analysts. The fund aims to buy high quality, capital-light businesses, which are typically more expensive than the index, but have great potential for growth. Corporate governance is extremely important. The team spend 3-12 months working on each new idea.

Risk

The fund has a strong bias to quality and is heavily underweight certain sectors, such as industrials, telecoms, materials and financials. It is also more exposed to the Asian consumer than Asian exporters. As a result, the fund may experience periods of underperformance in the short term, when low quality shares rally. Investors should also be aware of the currency risk.

Our Opinion

This is a core Asian equity fund run by a well-structured and well-resourced specialist team. We particularly like the fund’s willingness to differ from the benchmark and its aim to invest in long-term Asian winners. The focus on corporate governance, expert local knowledge and numerous company meetings are all reasons to think this fund will continue to outperform over the long term.

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