Matthews Asia Strategic Income Fund getting a new name

joe74

From email received today:

IMPORTANT NOTICE REGARDING CHANGE IN INVESTMENT POLICY

December 2, 2019

Dear Shareholder of the Matthews Asia Strategic Income Fund (the “Fund”),

We are planning to change the name of the “Matthews Asia Strategic Income Fund” to the “Matthews Asia Total Return Bond Fund.” We think this new name will better reflect the Fund's investment strategy and objective. The Fund's total return investment objective will not change.

joe74

Another example of a name change with no objective change. “Better reflects” = “we got the name wrong on our first try” or “we’re not achieving what our fund name suggests”?

hank

joe74 said:

“we got the name wrong on our first try” or “we’re not achieving what our fund name suggests”?

I get your point. Not knowledgeable about these guys, so I’ll take a pass.

About 8-10 years ago T Rowe did the same thing with TRRIX. Changed name from “Retirement Income Fund” to “Retirement Balanced Fund.” I was fine with that. I took them at their word that the new name better reflected the fund’s existing framework. Possibly the “income” part of the original name was misleading to some investors and suggested a less risky approach than the fund pursues. Also (I think importantly) prevailing interest rates in the U.S. and globally had fallen steeply during the fund’s relatively brief existence so that less income was being generated from the bond component than earlier envisioned.

Another one that baffled me a bit was TRIGX. Initially it was named T. Rowe Price International Growth and Income Fund. Than (also about 8-10 years ago) they renamed it International Value Equity Fund. They gave the same reason: to more accurately represent the investment approach the fund follows.

Shakespeare might say, “What’s in a name ...?” For mutual fund managers who find themselves in the midst of an investor class action lawsuit, perhaps quite a bit. Case in point - Oppenheimer’s “Core Bond Fund” which lost 36% in 2008. http://shareholdersfoundation.com/case/oppenheimer-core-bond-fund-investors-class-action-lawsuit-05282009 One can surmise that the litigation, ill will and investor exodus occasioned by this episode did much to hasten the demise of Oppenheimer.

Crash

"This investment seeks total return over the long term...It is not diversified." I guess M* took that from the Matthews website? Is it MAINX matched by M* to the wrong benchmark/index? It trails the Index in "Performance." But results have been quite good, I'd say. I'm out of Matthews, but I babysit some money for others, including a small chunk in MAINX.

David_Snowball

The Matthews fund is pretty much sui generis. In the US market, I can find only two other funds that are vaguely comparable, Harvest Asia Bond and Aberdeen Asia-Pacific Income. One other Asia bond fund liquidated a couple years ago. That makes it hard to construct a meaningful peer comparison. Morningstar had it as "world bond," where it was a four-star fund then moved it to "emerging markets bond," where it is a four-star fund.

That said, it's a poor fit - for purposes of benchmarking - with the group. I checked the correlations between the six Great Owl EM bond funds, looking at both their correlations with one another and their correlation with Matthews. Their inter-group correlation is in the mid-90s, their correlation with Matthews is in the mid-70s.

I own shares and have since launch. I'm impressed with Ms. Kong and am persuaded by her argument about the shift in the world financial capitals from New York and London to Asia. Modest correlation to the US bond market, about .53.

"Strategic" was all the rage in fund naming once. Not so much now. These things come and go.

David

syzygy

And, of course, the other Mathews Asian bond fund, MICPX, also managed by Kong and Patel.

MikeM

Just to add to syzygy's mention of MICPX, it is more than just bonds. Per one of David's commentaries:

Our July 2017 profile of Matthews Asia Credit Opportunities (MCRDX/MICPX) described it as investing in high-yield bonds. That’s correct but incomplete. Manager Satya Patel reminded us that the fund’s core investments can include “convertibles, hybrids and derivatives with fixed income characteristics.” Indeed, since inception convertible bonds have represented 20-25% of the portfolio.

Might be a bit more risk in this one.

VintageFreak

As long as they don't change their fund name to "Tactical". "Strategic" is bad (remember HSGFX?) and "Opportunities" is plenty bad AFAIAC. So MCRDX can be changed easily to simply drop "Opportunities".