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3 more Matthews Portfolio Managers exit

From Citywire - seems Sharat Shroff is finally leaving Pacific Tiger, which has had horrible performance, unable to beat its benchmark for the trailing 3, 5 and 10 year periods. A bit abrupt, this was announced in mid december and he'll be out the door by year end. Sounds like it was urgent to get him out as soon as possible. Tiger is easily matthews biggest fund so a bit surprised there wasn't a smoother and longer transition.

John Paul Lech, lead manager of matthews flagship emerging markets fund is also leaving as well as long time Japan manager Taizo Ishida. Both left Dec 19th.

I thought the last 4 or so years were bad for Matthews, starting with the departure of Kenichi Amaki, Tiffany Hsiao and Beini Zhou, but this has to be the most turmoil I've seen in my 30 years in the business. Word on the street is previous CIO Robert Horrocks was booted late 2023 as well, and the new CIO Sean Taylor is based in Hong Kong and not relocating to the San Francisco headquarters where most of the portfolio managers are based. How that is supposed to work out is beyond me.

What a mess that keeps getting messier. I wouldn't be surprised if we see the rest of Matthews PMs get lifted out soon or leave. I have no idea why they'd stay at this point. Word to the wise...stay clear. This firm could be going to zero very soon.

https://citywire.com/selector/news/matthews-asia-s-pacific-equity-fund-under-review-as-veteran-exits/a2432941

Comments

  • Yes. I left Matthews after an arrogant prick treated me like dirt on the phone, a handful of years ago. Glad I did.
  • Crash said:

    Yes. I left Matthews after an arrogant prick treated me like dirt on the phone, a handful of years ago. Glad I did.

    Do you recall which fund you were invested in at the time?

  • Sorry to hear this; the wheels are really coming off. I've kept MSMLX on watch since I last owned it pre-pandemic -- the only Matthews fund I would have still considered before these latest breakdowns. It's remained a great fund in its category and seems to have weathered the transition to EM space, although it's remained Asia-heavy. No longer a possibility for this kid ...
  • Crash said:

    Yes. I left Matthews after an arrogant prick treated me like dirt on the phone, a handful of years ago. Glad I did.

    Do you recall which fund you were invested in at the time?

    I had been in MACSX and MAPIX. Then consolidated all into MAPIX.
    I was calling---- as were many, many others---- about a missed dividend. Turns out a risky bet went south. The fellow on the phone read a pre-fabricated statement to me about it over the phone. Just a sentence or two.

    I said: "Sounds like you're reading from a script to me."
    He said: "I AM. I AM reading from a script to you."
    I said, "Why would you DO that?" (Why not talk to me like a human being, eh?)

    He said: "Listen, this is what was prepared. If you want to redeem your shares and go, you're free to do so!"
    ...I DID.
  • Sad story for a once respected outfit. A steady stream of manager resignations, introducing the I-class chares with a $3M minimum and raising the investor class expenses (then later dropping the $3M to $100K), the failure of MAVRX (Asia Value), the implosion of MAPIX, more resignations, then a profusion of products like an eczema outbreak of new funds.

    I was lucky to have made some money during the meteoric rise of funds like MIAPX, MITEX, APDYX (and held on too long, but luckily captured some profit).

    I wouldn't touch Matthews now with a barge pole.
  • chang said:

    Sad story for a once respected outfit.

    [snip]

    I wouldn't touch Matthews now with a barge pole.

    I concur on both counts.
  • Can it get any worse ?
  • edited February 4
    Derf said:

    Can it get any worse ?

    It can always get worse. It's actually quite hard for firms to die, they can limp along in zombie mode for a long time.

    I'm not sure why current managers would stay. Makes me wonder how good the guys still there really are. What's the saying? You typically lose the people you want to keep, and keep the ones you should of let go.

  • Other than the janitorial crew, who exactly is left there?
  • Crash said:
    Yup. Here is the article:

    Matthews Asia’s Pacific equity fund under review as veteran exits

    Flurry of fund-manager switches continues, with Sharat Shroff to leave by the end of the year, while EM and Japan equity managers also depart.

    Updated: Sharat Shroff will be added to Matthews Asia’s ever-expanding list of manager changes as the veteran Asian equity investor aims to leave the US-based boutique at the end of the year.

    Shroff, who joined the firm in 2005, is to formally exit at the end of this month, relinquishing roles across several strategies, most prominently the Matthews Pacific Tiger fund.

    Shroff was relieved of his role on the Matthews Asia ex Japan Total Return Equity fund at the start of the month, with newly added chief investment officer (CIO) Sean Taylor stepping in.

    It is understood Taylor, who formally becomes CIO next month but has been with the group since October, will take over as lead manager of the Pacific Tiger fund, with Inbok Song becoming co-lead.

    Andrew Mattock and Winnie Chwang will remain in situ as co-portfolio managers. At the same time, Matthews Asia will deepen the investment talent with emerging markets specialist Jeremy Sutch and Indian equity manager Peeyush Mittal also named as co-portfolio managers.

    The Matthews Asia Pacific Tiger fund is underperforming in its peer group, with a three-year total loss of 21.9% in US dollar terms to the end of November 2023. This is while the average fund in the Equity - Asia Pacific ex Japan sector fell 17% over the same period.

    The latest change regarding the Pacific Tiger fund, which has $276m (£217.5m) in its Ucits-compliant version and $2.35bn in its US vehicle, has prompted Morningstar to place the strategy under review.

    In an analyst note, Morningstar’s Bill Rocco wrote: ‘That’s an exceptional amount of personnel change, and this strategy’s restructured team could lead to modest or even significant modifications to its process or portfolio. Consequently, this strategy has been put under review.’

    Speaking to Citywire Selector last week, Cooper Abbott, CIO of Matthews Asia, delved into the widespread changes he has enacted since taking over in the summer of 2022. As well as tweaking and closing several funds, it’s also involved a huge amount of portfolio manager changes.

    One of the most prominent ones was the decision of Robert Horrocks to step down as CIO, with former DWS emerging markets chief Taylor being recruited to take over. Abbott said his emphasis would be on quality and experience, which has led to more teams-based investment approaches.

    A spokesperson for Matthews Asia told Citywire Selector: ‘Sharat has decided to leave the firm effective 31 December to pursue other opportunities. He will continue to partner with the portfolio management team on the transition of the portfolio.’

    Update: Further exits

    A spokesperson confirmed to Citywire Selector that, in addition to Shroff’s planned departure, emerging markets manager John Paul Lech and Japan specialist Taizo Ishida left the company on 19 December.

    Lech had been with the company since 2018, while Ishida had been with Matthews Asia since 2006.

    Speaking to Citywire Selector regarding these most recent changes, Cooper Abbott said: ‘Since my arrival at Matthews, we have made some changes, all with the goal of improving investment results for our clients.

    ‘A strong investment culture seeks to continually strengthen investment focus and outcomes. That is what we are doing.

    ‘Recent investment personnel terminations are testament to Matthews’ dedication to investment results, making changes where they are necessary to drive long-term alpha.

    ‘Matthews has exceptionally deep investment talent. We pride ourselves on delivering excellent investment results and high-quality client experiences... and will continue to deliver upon this goal.’

  • I guess Abbott can do no more than to spout the Party Line, eh? What a disaster.
  • "Matthews has exceptionally deep investment talent." How can it when so many have departed? Have unnamed analysts left as well? I don't know, but you'd think they wouldn't stick around either, unless they had no alternatives, and that's not a ringing endorsement of "deep talent."
  • edited February 10
    Matthews Funds and Third Avenue are the two biggest failures in the last couple of decades, followed by Grandeur Peaks (damaged, but not fatally) and IVA (a sad case).

    TAVFX only has $733m new (per M*) - it once was > $5-7bn (?) when Marty Whitman ran it during its most successful period.
  • Chang,

    Why you added Grandeur Peak funds in this category?
    I am still in their Global Opportunity fund and wondering if I missed any important information (like manager departure, etc.). I know their primary founder went on a sabbatical or something like that. Besides that, they lost a manager.
  • edited February 11
    mrc70 said:

    Chang,

    Why you added Grandeur Peak funds in this category?
    I am still in their Global Opportunity fund and wondering if I missed any important information (like manager departure, etc.). I know their primary founder went on a sabbatical or something like that. Besides that, they lost a manager.

    First Republic Bank was one of their top holdings in all their global funds. When it collapsed, they didn't admit their mistake, but blamed other factors. (There is a separate, lengthy discussion about this on MFO ... perhaps you can search for it.)

    I don't trust someone who cannot admit a mistake. To make matters worse, the funds are managed by teams with "guardians". I am afraid I think Grandeur Peak is too much hat and not enough cattle.

    I was fortunate to make some very nice money with GGSYX and GPMCX. I sold them (too late, as always) into the Covid crash, but still preserved a nice profit. Decided not to go back in, as my tax deferred capacity is now fully used with other funds that I am happy with.

    Best of luck to you. See you on BB.
  • chang said:

    mrc70 said:

    Chang,

    Why you added Grandeur Peak funds in this category?
    I am still in their Global Opportunity fund and wondering if I missed any important information (like manager departure, etc.). I know their primary founder went on a sabbatical or something like that. Besides that, they lost a manager.

    First Republic Bank was one of their top holdings in all their global funds. When it collapsed, they didn't admit their mistake, but blamed other factors. (There is a separate, lengthy discussion about this on MFO ... perhaps you can search for it.)
    Thanks Chang. I have not invested in Grandeur so didn't know about their holding in First Republic. Investors want honesty above all else. Yikes.

    Can you tell me more about the "guardians"? What does that mean?

  • sfnative said:

    "Matthews has exceptionally deep investment talent." How can it when so many have departed? Have unnamed analysts left as well? I don't know, but you'd think they wouldn't stick around either, unless they had no alternatives, and that's not a ringing endorsement of "deep talent."

    Exactly. If they're still at Matthews...it's likely b/c they can't get a job anywhere else.

  • The tread that @stillers posted above said it all about Grandeur and their investment approach. Think they share their same analysts with Rondure funds and their performance has suffered as well. Like @Chang stated that the company cannot owed up to their mistakes is a serious problem to their investors.

    Guardian advisors in Grandeur funds oversee their fund’s strategy and individual stock picks. Apparently that oversight failed on multiple levels that led to TWO bank failures in 2022.
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