Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Edit: No, I wouldn't rush out to buy any of them the first day they're available and didn't mean to imply that I would. I'm mainly glad to see the availability of the different wrapper.
+1. Yes, thanks, @TheShadow. Appreciate you keeping us abreast of things. However: Matthews? Naw. They have simply lost their mojo, their juju. I would not go back there.
Seriously. Why the hell invest outside of the USA? You can get any exposure you want by selecting certain USA co's to invest in? Example: You want exposure to high tech China...instead you buy MSFT, GOOGL, INTC etc, why screw around with shady, slippery gov'ts etc that are arming themselves to fight the USA?
You want Russia...what is that but big bank, ag, oil...you mean you can't get exposure thru BAC, DVN, EOG MOS? You want oglirarch kind of exposure, black box, where does the money really come from who knows?...you buy the Bitcoin...maybe?
No one has commented on the TRANSPARENT structure of these ETFs. It will join a small number of active equity ETFs that will publish portfolio holdings DAILY and more frequently to professionals as needed. It may not be worried about others frontrunning its portfolio as most of its securities may trade on foreign exchanges. There have been active bond ETFs for a while because it is hard to front-run bonds (many trade OTC only).
This is notable in that this portfolio transparency issue has held back the development of active equity ETFs. The new rules for semitransparent ETFs are also not friendly to securities that trade on foreign exchanges that are open when the US exchanges are closed.
In accordance with the Funds’ policies and procedures (the “Policies”), the Funds’ transfer agent, [ ], is responsible for dissemination of information about the Funds’ portfolio holdings. The Funds, together with [ ] and Matthews (the “Service Providers”), may disclose information concerning securities held in the Funds’ portfolios under the following circumstances:
(i) On each Business Day (defined below), each Fund will disclose prominently on its website, which is publicly available and free of charge, before the opening of regular trading on the primary listing exchange of the Fund shares, the Fund’s portfolio holdings that form the basis for the Fund’s next calculation of current NAV.
(ii) The Funds and the Service Providers may disclose the Funds’ portfolio security holdings in advance of general release and without delay to parties with which the Funds have ongoing arrangements to make this information available. Those parties receive such disclosure in connection with their day-to-day operations and management of the Funds and include the Funds’ custodian bank, [ ].; Fund accountant, [ ]; independent registered public accounting firm, [ ]; pricing service providers, ICE Data Services and Thomson Reuters; financial printer, Donnelley Financial Solutions; legal counsel, Paul Hastings LLP and Sullivan & Worcester LLP; and proxy voting services. The Funds also may disclose their portfolio security holdings to third parties in connection with their on-going efforts to analyze their trading activity, and in connection with their periodic reviews of the performance of existing fund agents and advisors or the retention of new agents and advisors. Specifically, these parties include Bloomberg Finance L.P., FactSet Research Systems Inc., and ACA Compliance Group. Neither the Funds nor Matthews receive any compensation or other consideration in connection with any of these disclosure arrangements.
(ii) The Funds may disclose the Fund’s portfolio holdings on a confidential basis to other selected third parties only with the prior consent of a member of Matthews’ Compliance Department who is Director level or above (“Compliance”) and when the Funds have a legitimate business purpose for doing so. Examples of legitimate business purposes in which selective disclosure of the Funds’ portfolio securities may be appropriate include disclosure for due diligence purposes to an investment advisor that is in merger or acquisition talks with Matthews; disclosure to a newly hired investment advisor or sub-advisor prior to them commencing their duties; and disclosure to a rating or ranking organization. Currently the Funds have no such disclosure arrangements in place. In accordance with the Policies, third parties are required to keep confidential any information disclosed to them in accordance with the terms and conditions in non-disclosure agreements and/or confidential agreements, and no compensation may be received by the Funds, a Service Provider or any affiliate in connection with disclosure of such information. Such selected disclosure of portfolio holdings will be reported to the Board of Trustees at its next regular meeting, and such report should state the business purpose of the disclosure.
(iv) As required by the federal securities laws, including the 1940 Act, the Funds will disclose their portfolio holdings in their applicable regulatory filings, including shareholder reports, Form N-PORT, Form N-CSR or such other filings, reports or disclosure documents as the applicable regulatory authorities may require.
Certain separate client accounts and other pooled investment vehicles (such as those organized in foreign jurisdictions) managed by Matthews or its affiliates (such separate client accounts and other pooled investment vehicles collectively,"
I've invested with Matthews for decades, but redeemed in the last 5 years as they have lost a lot of key young PMs and next generation management, and investment performance has become mediocre at best (related, the CEO change is long overdue).
I saw their ETF announcements but was left underwhelmed.
1) The china strategy managed by andrew mattock is the most benchmark-aware strategy in matthews lineup. The fund only has an active share of 50-60%. So this looks very much like an index fund, but with a much higher expense ratio and performance is middle of the pack.
2) Asia Innovators used to be called the Asia Science and Tech fund...irrespective of the name change, the PM Michael Oh is the same and the strategy is still...largely an Asia ex Japan tech fund. They are obviously trying to take market share from Kraneshares and KWEB which is one of the biggest Asia ETFs in existence. So not shocked an ETF version is launching.
3. Matthews Emerging Markets strategy has been around for almost 3 years, but the track record is pretty mediocre and assets have remained very small. Not surprising since Matthews has not hired any real emerging markets staff since launch. I questioned if Matthews was really committed to becoming a true EM manager when they first launched this fund....I am still skeptical. ETF launch doesn't mean anything to me with that performance!
My big question: Where are the flagship strategies? Pacific Tiger, Asia dividend are noticably absent from the ETF launch. Not even Japan equity? The absence of these major strategies makes me think this is not a move to try and help investors.
I am of the same mindset as Crash. Matthews has lost its mojo and I've stayed away. They used to be the pinnacle of active management but now their flagship fund Pacific Tiger can't even beat the index! When you see so many young, next gen staff leave for other firms ---> huge red flag that indicates its time to move on. Also, I've heard from people internally that a private equity firm is a part owner and has been trying to cut costs to "beautify" the firm for sale, which hasn't helped with moral.
I've owned Matthews funds (MAPIX, MAPTX) previously and believed Matthews was an estimable firm. Lydia So and Rahul Gupta left the firm in April 2020. Tiffany Hsiao, YuanYuan Ji, and Beini Zhou left August 31, 2020. These PM departures occurred within a short timeframe which really concerned me. I no longer have a high regard for Matthews because of this and mediocre overall performance in recent years.
@ProtonAnalyst33, I was not aware that a private equity firm has an ownership stake in Matthews. Do you know when this PE firm initiated its stake?
The problem is not Matthews (for Asia exposure, via OEF or ETF) or TRP for its several regional EM funds, but it is that wealth created in many of those markets has not been shared with investors. I guess they call that a structural problem. Even Chile, whose former economy was designed by U of Chicago economists, failed to reward foreign investors over the long haul. I tried investing in LA CEFs, to my chagrin. It wasn’t long ago when Chinese internet stocks populated every hot international and global growth fund. To my knowledge, it wasn’t the failure of the fund managers that led to that sector’s demise, but it was unadulterated authoritarian market intervention that caused those stocks to tank. Come to think of it, I have not felt any irrational exuberance for EMs in quite some time. I may not be cured of that malady, but I’ll take remission as a satisfactory outcome.
I've owned Matthews funds (MAPIX, MAPTX) previously and believed Matthews was an estimable firm. Lydia So and Rahul Gupta left the firm in April 2020. Tiffany Hsiao, YuanYuan Ji, and Beini Zhou left August 31, 2020. These PM departures occurred within a short timeframe which really concerned me. I no longer have a high regard for Matthews because of this and mediocre overall performance in recent years.
@ProtonAnalyst33, I was not aware that a private equity firm has an ownership stake in Matthews. Do you know when this PE firm initiated its stake?
Your list of names made me go dig up my notepad! There were other key PM departures: Raymond Deng who was a brilliant up and coming PM on Pacific Tiger and China left for Genesis in 2021. Robert Harvey, lead PM of their frontier asia fund also left in 2021. I recall the first major PM departure that shocked me was Kenichi Amaki, who was lead PM of the Japan fund (left for capital group in 2019). Brilliant investor and had basically been with the firm his entire investment career up until that point. how could they let him go? That was the begining of the exodus it seems and I stopped investing in the matthews funds and started asking more questions. In total, I recall them losing over 10 next gen PMs in the span of 2 years. Scary for an investment team of less than 40!
I believe their new COO also left in less than 2 years, but the PM departures and their profiles (and where they left to) really spooked me.
Re the PE firm, I googled and found this. I think its Lovell Minnik. This article says they first invested in Matthews in 2011. That's over 10 years of being invested, which is a bit long in the tooth for a PE fund. Seems that supports the "sales mode" the firm has undertaken. I am guessing that fund life is coming to an end, so PE firm must sell sell sell!
Thanks for the info ProtonAnalyst33. I recall that Robert Harvey and the global CIO left. The global CIO departure after a very short tenure was highly unusual.
https://seafarerfunds.com/commentary/ As the China relationships deteriorated, the question comes up on whether Chinese market is investable given the government interference with their large tech companies?
Thanks for the info ProtonAnalyst33. I recall that Robert Harvey and the global CIO left. The global CIO departure after a very short tenure was highly unusual.
You bet. Yes, highly unusual. Where there's smoke, theres fire
Saw this on citywire this weekend. Another lead PM and head of fixed income Teresa Kong is leaving Matthews at the end of July. Seems the exodus of portfolio managers out of Matthews continues. Sad to see...something is wrong there, people are fleeing.
Not sure. She's nowhere near retirement age, so I'm guessing she will pop up somewhere. I saw her just a month or so ago on Bloomberg, she is a pretty frequent contributor.
Horrocks is still there, and he'll be making one of his regular appearances on Wealthtrack next week. Consuelo doesn't normally ask challenging questions, but maybe she'll make an exception in this case.
Comments
Edit: No, I wouldn't rush out to buy any of them the first day they're available and didn't mean to imply that I would. I'm mainly glad to see the availability of the different wrapper.
I do watch those markets for movement.
Seriously. Why the hell invest outside of the USA? You can get any exposure you want by selecting certain USA co's to invest in? Example: You want exposure to high tech China...instead you buy MSFT, GOOGL, INTC etc, why screw around with shady, slippery gov'ts etc that are arming themselves to fight the USA?
You want Russia...what is that but big bank, ag, oil...you mean you can't get exposure thru BAC, DVN, EOG MOS? You want oglirarch kind of exposure, black box, where does the money really come from who knows?...you buy the Bitcoin...maybe?
Seriously.
Best Regards,
Baseball Fan
This is notable in that this portfolio transparency issue has held back the development of active equity ETFs. The new rules for semitransparent ETFs are also not friendly to securities that trade on foreign exchanges that are open when the US exchanges are closed.
From the SAI, pg 37, that is found after scrolling more than half-way down in the OP link; there is also a direct click to the portfolio disclosure page, https://www.sec.gov/Archives/edgar/data/923184/000119312522106626/d333595d485apos.htm#sai333595_26
"Disclosure of Portfolio Holdings
In accordance with the Funds’ policies and procedures (the “Policies”), the Funds’ transfer agent, [ ], is responsible for dissemination of information about the Funds’ portfolio holdings. The Funds, together with [ ] and Matthews (the “Service Providers”), may disclose information concerning securities held in the Funds’ portfolios under the following circumstances:
(i) On each Business Day (defined below), each Fund will disclose prominently on its website, which is publicly available and free of charge, before the opening of regular trading on the primary listing exchange of the Fund shares, the Fund’s portfolio holdings that form the basis for the Fund’s next calculation of current NAV.
(ii) The Funds and the Service Providers may disclose the Funds’ portfolio security holdings in advance of general release and without delay to parties with which the Funds have ongoing arrangements to make this information available. Those parties receive such disclosure in connection with their day-to-day operations and management of the Funds and include the Funds’ custodian bank, [ ].; Fund accountant, [ ]; independent registered public accounting firm, [ ]; pricing service providers, ICE Data Services and Thomson Reuters; financial printer, Donnelley Financial Solutions; legal counsel, Paul Hastings LLP and Sullivan & Worcester LLP; and proxy voting services. The Funds also may disclose their portfolio security holdings to third parties in connection with their on-going efforts to analyze their trading activity, and in connection with their periodic reviews of the performance of existing fund agents and advisors or the retention of new agents and advisors. Specifically, these parties include Bloomberg Finance L.P., FactSet Research Systems Inc., and ACA Compliance Group. Neither the Funds nor Matthews receive any compensation or other consideration in connection with any of these disclosure arrangements.
(ii) The Funds may disclose the Fund’s portfolio holdings on a confidential basis to other selected third parties only with the prior consent of a member of Matthews’ Compliance Department who is Director level or above (“Compliance”) and when the Funds have a legitimate business purpose for doing so. Examples of legitimate business purposes in which selective disclosure of the Funds’ portfolio securities may be appropriate include disclosure for due diligence purposes to an investment advisor that is in merger or acquisition talks with Matthews; disclosure to a newly hired investment advisor or sub-advisor prior to them commencing their duties; and disclosure to a rating or ranking organization. Currently the Funds have no such disclosure arrangements in place. In accordance with the Policies, third parties are required to keep confidential any information disclosed to them in accordance with the terms and conditions in non-disclosure agreements and/or confidential agreements, and no compensation may be received by the Funds, a Service Provider or any affiliate in connection with disclosure of such information. Such selected disclosure of portfolio holdings will be reported to the Board of Trustees at its next regular meeting, and such report should state the business purpose of the disclosure.
(iv) As required by the federal securities laws, including the 1940 Act, the Funds will disclose their portfolio holdings in their applicable regulatory filings, including shareholder reports, Form N-PORT, Form N-CSR or such other filings, reports or disclosure documents as the applicable regulatory authorities may require.
Certain separate client accounts and other pooled investment vehicles (such as those organized in foreign jurisdictions) managed by Matthews or its affiliates (such separate client accounts and other pooled investment vehicles collectively,"
I saw their ETF announcements but was left underwhelmed.
1) The china strategy managed by andrew mattock is the most benchmark-aware strategy in matthews lineup. The fund only has an active share of 50-60%. So this looks very much like an index fund, but with a much higher expense ratio and performance is middle of the pack.
2) Asia Innovators used to be called the Asia Science and Tech fund...irrespective of the name change, the PM Michael Oh is the same and the strategy is still...largely an Asia ex Japan tech fund. They are obviously trying to take market share from Kraneshares and KWEB which is one of the biggest Asia ETFs in existence. So not shocked an ETF version is launching.
3. Matthews Emerging Markets strategy has been around for almost 3 years, but the track record is pretty mediocre and assets have remained very small. Not surprising since Matthews has not hired any real emerging markets staff since launch. I questioned if Matthews was really committed to becoming a true EM manager when they first launched this fund....I am still skeptical. ETF launch doesn't mean anything to me with that performance!
My big question: Where are the flagship strategies? Pacific Tiger, Asia dividend are noticably absent from the ETF launch. Not even Japan equity? The absence of these major strategies makes me think this is not a move to try and help investors.
I am of the same mindset as Crash. Matthews has lost its mojo and I've stayed away. They used to be the pinnacle of active management but now their flagship fund Pacific Tiger can't even beat the index! When you see so many young, next gen staff leave for other firms ---> huge red flag that indicates its time to move on. Also, I've heard from people internally that a private equity firm is a part owner and has been trying to cut costs to "beautify" the firm for sale, which hasn't helped with moral.
Lydia So and Rahul Gupta left the firm in April 2020.
Tiffany Hsiao, YuanYuan Ji, and Beini Zhou left August 31, 2020.
These PM departures occurred within a short timeframe which really concerned me.
I no longer have a high regard for Matthews because of this and mediocre overall performance in recent years.
@ProtonAnalyst33,
I was not aware that a private equity firm has an ownership stake in Matthews.
Do you know when this PE firm initiated its stake?
https://www.morningstar.com/articles/1078810/whatever-happened-to-emerging-markets-stock-funds
The problem is not Matthews (for Asia exposure, via OEF or ETF) or TRP for its several regional EM funds, but it is that wealth created in many of those markets has not been shared with investors. I guess they call that a structural problem. Even Chile, whose former economy was designed by U of Chicago economists, failed to reward foreign investors over the long haul. I tried investing in LA CEFs, to my chagrin. It wasn’t long ago when Chinese internet stocks populated every hot international and global growth fund. To my knowledge, it wasn’t the failure of the fund managers that led to that sector’s demise, but it was unadulterated authoritarian market intervention that caused those stocks to tank. Come to think of it, I have not felt any irrational exuberance for EMs in quite some time. I may not be cured of that malady, but I’ll take remission as a satisfactory outcome.
There was also that bizarre hiring then resignation of their President and CIO, Yu Ming Wang. The loss of PMs couldn't be attributable to him b/c many occured before he was even brought in. Truly odd and something I've never seen before in my 40 years in the business. https://citywireselector.com/news/matthews-asia-global-cio-exits-after-less-than-a-year-in-role/a1404581
I believe their new COO also left in less than 2 years, but the PM departures and their profiles (and where they left to) really spooked me.
Re the PE firm, I googled and found this. I think its Lovell Minnik. This article says they first invested in Matthews in 2011. That's over 10 years of being invested, which is a bit long in the tooth for a PE fund. Seems that supports the "sales mode" the firm has undertaken. I am guessing that fund life is coming to an end, so PE firm must sell sell sell!
https://www.themiddlemarket.com/news/lovell-minnick-backs-asia-focused-asset-manager
Something is going on at Matthews and it doesn't seem great for investors. I'd urge everyone to do your diligence.
I recall that Robert Harvey and the global CIO left.
The global CIO departure after a very short tenure was highly unusual.
https://seafarerfunds.com/documents/the-china-investment-dilemma.pdf
https://seafarerfunds.com/commentary/
As the China relationships deteriorated, the question comes up on whether Chinese market is investable given the government interference with their large tech companies?
https://citywireselector.com/news/a-rated-bond-boss-to-exit-matthews-asia/a2391349
The situation at Matthews is sad indeed.
I wonder who Ms. Kong's next employer will be?