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Matthews Asia Renames Fund To Matthews Asia Innovators Fund
FYI: Matthews Asia has announced the renaming of the Matthews Asia Science and Technology Fund (Investor Class: MATFX; Institutional Class: MITEX) to the Matthews Asia Innovators Fund. Regards, Ted http://www.businesswire.com/news/home/20160503005302/en
Uhhh ... top 3% of all global funds for the past three, five and ten years. It trailed its peers in 2015 by 1.3% and YTD by 3.5%. Their argument is that they favor firms that generate lots of free cash flow, which they take to be a sign of a sustainable business that can finance its own growth without recourse to borrowing. The market lately has emphatically favored "get big quick" story stocks. The four FANG stocks accounted for all of the S&P 500's gains last year but if you look at Netflix (the "N"), they're trading for $110/share and reporting $0.04 earnings/share. Facebook ("F") reported $0.18/share last year against a share price of $115. They do own Alphabet/Google but not Amazon.
So if "story stocks" are bad and they refuse to own the story stocks, despite their current price momentum, wouldn't that be a good thing?
IWIRX does have a stellar record but seems to be just holding serve over the last 2 to 3 years. The managers' explanation of what "innovation" means to them is a head-scratcher for me. A look at fund holdings reveals a collection of mostly solid large cap tech US companies who certainly spend something on R&D, but not firms I think of as terribly innovative. I'd expect to see the likes of Tesla and something in health and medicine (although GILD is included). I do like the choice of Wisdom Tree as a holding. I've owned G-A funds in the past and I have reduced Matthews in favor of Seafarer and Grandeur Peak.
Not sure about the 2-3 year holding pattern thing. They crushed the competition 3 years ago and crushed them 2 years ago then trailed for the first 3 quarters of 2015 then outperformed in the 4th quarter. They're trailing this year. Over the whole period from Jan. 2015 to now, they trail their peers by 5% cumulative.
Innovators, to them, do stuff like high levels of employee training and product refinement (think of it as "continual internal upgrades"). But they also look for businesses that won't flame-out which means many quarters of cash-flow growth. Tesla, cool as they are, posted losses of $0.54 share with a share price of $225. They also lose $30,000 on every high-end car they sell. That's not a profile these guys would get within a mile of.
IWIRX is surely doing a lot better than its stablemates, particularly Alternative Energy, Global Energy, and Asia Focus. G-A made its mark with the China-Hong Kong fund several years ago, but that one has faded also. I'm surprised the firm is able to retain talent given its overall weakness.
Comments
Uhhh ... top 3% of all global funds for the past three, five and ten years. It trailed its peers in 2015 by 1.3% and YTD by 3.5%. Their argument is that they favor firms that generate lots of free cash flow, which they take to be a sign of a sustainable business that can finance its own growth without recourse to borrowing. The market lately has emphatically favored "get big quick" story stocks. The four FANG stocks accounted for all of the S&P 500's gains last year but if you look at Netflix (the "N"), they're trading for $110/share and reporting $0.04 earnings/share. Facebook ("F") reported $0.18/share last year against a share price of $115. They do own Alphabet/Google but not Amazon.
So if "story stocks" are bad and they refuse to own the story stocks, despite their current price momentum, wouldn't that be a good thing?
Puzzled, as is so often the case,
David
Not sure about the 2-3 year holding pattern thing. They crushed the competition 3 years ago and crushed them 2 years ago then trailed for the first 3 quarters of 2015 then outperformed in the 4th quarter. They're trailing this year. Over the whole period from Jan. 2015 to now, they trail their peers by 5% cumulative.
Innovators, to them, do stuff like high levels of employee training and product refinement (think of it as "continual internal upgrades"). But they also look for businesses that won't flame-out which means many quarters of cash-flow growth. Tesla, cool as they are, posted losses of $0.54 share with a share price of $225. They also lose $30,000 on every high-end car they sell. That's not a profile these guys would get within a mile of.
David