Matthews Asia, an asset management firm known for its mutual funds dedicated mainly to Asian markets, today expanded its product line with the debut of three exchange-traded funds that are largely similar to three of its existing mutual funds that focus on global emerging markets, Asia and China.
The active, fully transparent products mark the first foray into ETFs for Matthews Asia, which has 14 mutual funds across various equity and fixed-income categories spanning the Asian region, along with two global emerging market equity funds. All told, the company has roughly $17.4 billion in assets under management.
The Matthews Emerging Markets Equity Active ETF (MEM), Matthews Asia Innovators Active ETF (MINV) and Matthews China Active ETF (MCH) all have expense ratios of 0.79%, which range from 27 to 34 basis points cheaper than their respective corresponding mutual funds. And all three ETFs are managed by the same portfolio managers and employ the same investment approach and process as their counterpart mutual funds.
Jonathan Schuman, global head of distribution at Matthews Asia, noted in an interview that some minor differences between the ETF and mutual fund portfolios could occur due to, say, a certain market not allowing for in-kind settlement of trades that take place within the ETF structure.
“But investors quite literally will be getting very comparable exposure for the two types of vehicles for these three strategies,” he said.
Schuman said Matthews Asia chose these three strategies for its maiden ETF launch because each represents a distinct category reflecting the company's investment expertise based on its extensive boots-on-the-ground coverage in its targeted overseas markets.
“China is a market where a substantial percentage of the listed market universe are companies that don’t create value for shareholders, so you need an active approach in order to get access to the value creators in China,” he explained. “Our active China strategy provides access to both A-shares and offshore-listed Chinese companies.”
Regarding the Matthews Asia Innovators Active ETF, Schuman said it provides broader access to the types of innovative companies that are driving Asian economies when compared to narrowly focused thematic ETFs or ETFs focused on a particular country.
In the area of emerging markets, he offered that his firm’s active approach is best suited for finding growth opportunities. “Many global emerging market indices tend to be core- to value- oriented as a style, and investing passively doesn’t provide as much growth as one would expect from an emerging markets allocation.