MAINX Matthews bonds

Crash

MAINX I track this one, and babysit some money for friends. I put them into this one, since 2010. It's 4.98% of their stuff. For 2019, divs averaged out to 3.7 cents/month per share. I own other funds that are doing less well than that. Name changed, to "Matthews Total Return" bond fund. Current yield is 3.99, call it 4%. Up 13% in 2019. Up 1.62% YTD. The fund will turn 10 years old very soon. Teresa Kong still at the helm. With this selection, I don't have to say, on behalf of those friends: "I coulda been a contender!"

VintageFreak

I own in my IRA along wit MAPIX, MACSX, MSMLX, MCRDX and MAVRX

Sven

Moved away from Matthews funds awhile back when Andrew Foster left. Nothing today at Matthews are truly exceptional but the fee are above average. I can always find more cheaper alternatives while having the same performance.

We owned MAINX in the past, but switched to Vanguard EM bond, VEGBX. The expense ratio is at 0.45%, less than half of that of MAINX.

MikeW

@Sven . Interesting young fund. Has performed well. Can you tell me what factors you find compelling about the fund? Thanks for bringing to our attention

Sven

MFO Premium brought it to my attention. Virtually no press on the fund. Review the record and risk compare to other EM debt local currency funds. It is quite good on the risk. Still untested in severe down market such as 2008. So go slow...

joe74

Appears to be primarily government debt. Higher on quality scale. Exposure in Central and South America, some Middle East and Africa. Little Asia. Not sure about duration but yields around 5%. High turnover. Also about 5x the size of MAINX though half its age.

msf

@joe74 posted some of what I was constructing below, though I may still be filling in a little:

"other EM debt local currency funds". Is either fund primarily invested in unhedged, locally denominated debt?

Vanguard says of its fund that "the majority of bonds are expected to be invested in in U.S. dollar-denominated bonds or hedged back to the U.S. dollar. "

Meanwhile, until this month, Matthews benchmarked MAINX against the Markit iBoxx Asian Local Bond Index. According to the fund prospectus, Mathews just changed the fund's benchmark to 50% of this index, and 50% of J.P. Morgan Asia Credit Index, which is dollar-denominated. That seems to suggest that the fund had been invested primarily in local currency bonds but has recently moved closer to a 50/50 mix (currently 54% in US dollars).

With international investments, currency movements can play such a large role in performance that much of the difference between funds can be explained by this alone. I'm not saying that's the case here. Rather the suggestion that these are local currency funds invites checking further into how accurate that is.

Other notable differences:

Vanguard is virtually all sovereign debt; Matthews is 20%. (From M*'s new portfolio pages for the funds.)

Most of the Matthews fund is invested in east/southeast Asia, with the remainder (19%) in south Asia (India, Sri Lanka), while little of Vanguard's fund is in either east/southeast Asia (5% in Indonesia, 2% in China) or south Asia (1% in India). The little exposure that Vanguard has in Asia comes from central Asia (a couple of "stans"), and from the Asian countries of the Middle East (Saudia Arabia, Bahrain, etc.). Very different regions.

Maybe Vanguard alters its mix depending on the investment climate, or maybe these are geographically complementary funds.

A quick check of (semi) annual reports suggests that the Vanguard fund has had consistently little interest in east/southeast/south Asia aside from Indonesia (4% - 8%).
March 31, 2016 report
Sept 30, 2016 report
March 31, 2017
Sept 30, 2017 report
March 31, 2018 report
Sept 30, 2018 report
March 31, 2019 report
Sept 30, 2019 report