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Wednesday, December 7, 2011

Matthews Asia's Lucky 13th Fund Bets on Bonds

News summary by MFWire's editors

Two decades after its founding, Matthews International Capital Management [profile] is diversifying its business by opening its first fixed income mutual fund, reports PlanSponsor.

The San Francisco-based mutual fund sponsor now offers 13 mutual funds, including its 12 existing equity mutual funds that each have an Asian investment theme. The firm claimed $15.7 billion in total AUM as of the end of November.

The Matthews Asia Strategic Income Fund opened its doors on November 30 and is intended to be a low volatility product which seeks a long-term total return especially on income, according to company officials. It comes in two share classes.

Teresa Kong, Gerald Hwang and Robert Horrocks act as PMs on the mutual fund.

Matthews CIO Robert Horrocks explained that the fund will take advantage of "the enhanced breadth and depth of Asia's bond markets, coupled with their strong fundamentals."

In the past decade, Horrocks stated that Asia's bond markets have grown remarkably, and the significant structural reforms have resulted to steady upgrades in the region's sovereign credit rating even as some developed Western countries experienced notable rating downgrades. The liquidity, diversification and transparency of Asia's bond markets have also improved.

Company Press Release


Investing across capital structure and currencies, the Fund’s bottom-up approach emphasizes creditworthiness, price stability and currency appreciation

San Francisco, CA, Dec. 6, 2011—Matthews International Capital Management, LLC, advisor to the Matthews Asia Funds (http://matthewsasia.com), announced the expansion of its fund lineup to include the firm’s first dedicated fixed income investment strategy, the Matthews Asia Strategic Income Fund.

Managed by Teresa Kong, CFA, and co-managed by Gerald Hwang, CFA, and Robert Horrocks, PhD, the Matthews Asia Strategic Income Fund will seek total return over the long term, with an emphasis on income. The Fund invests primarily in bonds and other debt securities of Asian corporate and sovereign issuers in both local and hard currencies, and seeks high, risk-adjusted return by investing across the capital structure and across currencies.

Matthews believes the growth of Asia’s bond markets is one of the region’s most important and remarkable economic developments of the past decade. The region’s significant structural reforms have led to steady upgrades in Asia’s sovereign credit ratings while several developed Western countries have recently suffered downgrades. In addition, Asia’s bond markets have experienced improvements in liquidity, transparency and diversification.

“Investors’ fixed income portfolios tend to be underinvested in Asia since widely used global debt benchmarks generally allocate to the most indebted countries as opposed to the most creditworthy,” said Teresa Kong. “At Matthews, we take an active, bottom up approach and weight our portfolio in proportion to a country’s creditworthiness, price stability and currency appreciation.”

The Matthews Asia Strategic Income Fund is intended as a lower volatility product than the firm’s other Funds, offering the potential for attractive yield and diversification. Both Investor (MAINX) and Institutional (MINCX) Class Shares are available for this Fund.

“Foreign investors have increasingly gained access to Asian bonds. This increase has come as more overseas investors seek to reallocate assets into emerging countries in a quest for higher returns and diversification away from the potentially diminishing purchasing power of the U.S. dollar,” said Matthews Chief Investment Officer, Robert Horrocks, PhD.

“We are pleased that the enhanced breadth and depth of Asia’s bond markets, coupled with their strong fundamentals, now enable us to offer our first fixed income investment strategy.”

About Matthews
Matthews is an independent, privately owned investment management firm and the largest dedicated Asia investment specialist in the United States. Founded in 1991, Matthews believes in the long-term growth of Asia and has focused its efforts and expertise within the region, investing through a variety of market environments. Its investment offerings provide a broad range of choices for building a global portfolio that includes exposure to Asia. With $15.7 billion in assets under management as of November 30, 2011, Matthews employs a bottom-up, fundamental investment philosophy, with a focus on long-term investment performance. For more information about Matthews, please visit matthewsasia.com.

You should consider the investment objectives, risks, charges and expenses of the Matthews Asia Funds carefully before making an investment decision. A prospectus with this information and other information about the Funds may be obtained by calling 1-800-789-ASIA or by visiting matthewsasia.com. Please read the prospectus carefully before investing as it explains the risks associated with investing in international markets.

Investing in international markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflations risks. In addition, single-country and sector strategies may be subject to a higher degree of market risk than diversified strategies because of concentration in a specific industry, sector or geographic location. Investing in small companies is more risky and more volatile than investing in large companies.

An investment in the Fund is subject to interest rate risk, which is the possibility that a Fund's yield will decline due to falling interest rates and the potential for bond prices to fall as interest rates rise. The value of debt securities may be affected by the ability of issuers to make principal and interest payments. The Fund may invest in the following: derivatives which can be volatile and affect Fund performance; high-yield bonds (junk bonds) which can subject the Fund to substantial risk of loss; and structured investments which can change the risk or return, or replicate the risk or return of an underlying asset.

Matthews Asia Funds are distributed in the United States by BNY Mellon Distributors Inc.Matthews Asia Funds are distributed in Latin America by HMC Partners.

Edited by: HFD

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