Matthews Pacific Tiger Active ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy merits an Above Average Process Pillar rating. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People, Process and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Fed Inter Mun In Fd Shs of Benef.Interest

Bridgepoint Education

JPMorgan BetaBuilders Canada ETF

Service Corp

SM Energy

This strategy’s Process rating drops to Above Average from High for personnel and other reasons.
This strategy employs the same quality-growth approach as Matthews India MINDX and several of its other siblings. The managers pursue strong and durable growers selling at moderate valuations. They make full use of their investment universe and pay particular attention to firms that will benefit from the region's rising income levels. They are also willing to load up on countries and sectors packed with compelling growers and to go light on or ignore areas where attractive opportunities are scarce. As is the case at the other growth-oriented strategies from Matthews, the end result here is a portfolio that stands out from most Morningstar Category peers and relevant benchmarks. 
All that is sound as well as distinctive. But the December 2023 investment-team departures and other changes—plus the many prior ones—call into question whether the team has the overall resources, stability, and continuity to implement any process in an excellent fashion. The process has earned generally mixed to disappointing results during the past several years at most of the Matthews offerings that employ it. And while the firm’s leaders and portfolio managers recently indicated that they’re striving to improve position sizing, portfolio construction, and active-risk management across the firm's lineup—which makes sense—it’s early days for their efforts.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point) Morningstar maps the covered vehicle’s Process Pillar to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning Process Pillar ratings to vehicles that follow the same strategy.

Above Average

Process

Matthews continues to suffer from too much portfolio-manager and analyst turnover, and the recent changes here and elsewhere at the firm drop this fund’s People rating to Average from Above Average.
Investment-team departures and changes have been a problem at the firm for years. Most recently, three portfolio managers and an analyst were dismissed in December, and many of the remaining team members took on new roles at the same time. Some of those changes affected this strategy. Sharat Shroff was dismissed from his co-lead manager role here and his comanager role on Matthews India MINDX and left the firm, while Sean Taylor was named as a co-lead manager and Peeyush Mittal and Jeremy Sutch were named as comanagers here. Inbok Song is still a co-lead manager, and comanagers Andrew Mattock and Winnie Chwang remain in place. 
Shroff had served as a co-lead or lead manager on this fund since 2008, so his departure is disquieting. Song has solid credentials, but she has only been a co-lead manager since April 2021 and this strategy has underperformed since she assumed her current role. Taylor has a good resume and had success as a lead manager at another firm while focusing on position sizing, portfolio construction, and the like as he is doing here. But he also serves as the firm’s CIO and comanages another strategy, so he has a lot on his plate. Although all four comanagers have solid or better credentials, they also all have other manager responsibilities as well as short tenures here.

Note: The People Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point), Morningstar maps the covered vehicle’s People Pillar ratings to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning People Pillar ratings to vehicles that follow the same strategy.

Average

People

Matthews International Capital Management still has strengths, but a transforming strategy roster, personnel turnover, and a big decline in assets warrant a drop of its Parent rating to Average from Above Average.

Matthews has a long history of success with funds that focus on Asian equities, but it has overhauled its strategy roster in recent years. Since early 2020, it has liquidated three funds, merged another away, launched its first diversified emerging-markets fund, and converted two of its Asia funds into diversified emerging-markets offerings. It also has opened four active exchange-traded funds in the past 12 months. That's a lot of change, and the firm is unproven in the diversified emerging-markets arena, though the fact that Asian stocks dominate the emerging-markets universe is grounds for optimism.
 
Matthews still has 30 individuals—excluding portfolio strategists and traders—on its investment team, and many are seasoned and skilled. But the firm has lost quite a few managers and analysts since the start of 2020, and the investment team is much smaller than it was. Further, its management team has had notable departures and retirements, such as former CEO William Hackett. Fundholders have pulled sizable amounts from Matthews' funds in recent years, and assets under management fell to $12 billion as of May 31, 2023, from $27 billion as of Dec. 31, 2019.

Parent

Matthews Pacific Tiger Active ETF

ASIA is an actively managed fund that seeks long-term capital appreciation by investing in companies located in Asia, excluding Japan. The fund manager selects stocks based on strong fundamentals.

Matthews Asia Dividend Active ETF

Matthews Emerging Markets Sustainable Future Active ETF

Matthews India Active ETF

Matthews Japan Active ETF

Matthews Asia has launched five new actively managed emerging market ETFs on the New York Stock Exchange. The firm's full suite of transparent active ETF strategies will be similar to its existing mutual funds.

Matthews Asia Launches 5 New Active Emerging Market ETFs

SAN FRANCISCO, Sept. 22, 2023 (GLOBE NEWSWIRE) -- Matthews further enhanced its Emerging Markets leadership in Active ETFs today with the launch of five new actively managed exchange-traded funds (ETFs) on the New York Stock Exchange. Following the launch of its Active ETFs platform last year, this will bring the firm's suite of Emerging Market and Asia-focused ETFs to 10.

News for Matthews Pacific Tiger Active ETF ETF (ASIA)