“Paul Matthews predicted in 1991 that Asia would drive worldwide economic growth, and obviously he was right,” Kenny Lowe bluntly states.
The lead manager of the Matthews Asia Focus Fund (MAFSX), launched on April 30, and co-manager of the $4.65 billion Matthews Asian Growth and Income Fund was quick to add that the firm doesn’t have an Asia strategy; it has $24 billion in 15 distinct strategies.
It’s the belief that strategy matters that fuels the firm’s bottom-up stock picking, so questions surrounding hard and soft landings, stimulus from Beijing and other Sino-macroeconomic issues don’t seem to matter as much.
“We always encountering questions surrounding Chinese growth,” Lowe explains. “It’s a top-line view, and we’re more interested in looking at it company by company. We still see a lot of investment opportunities, especially surrounding wage and income growth in the middle class.”
This approach often leads them to underresearched small and midsize companies, as well as off-the-radar service industries, such as health care or tourism, which are still small but are expected to grow rapidly as consumer spending on services increases in Asia.
When asked about travel and time he spends in Asia, he notes a recent addition of the company outlook, called Asia Insight, was dedicated to this question.
“The piece was called ‘Kicking the Tires’ and it detailed the 2,000 meetings per year taken by company personnel,” he said. “Everyone travels, we are very much active in the region, and we understand the ecosystem and long-term opportunities. Each manager has autonomy over their own funds. We have 13 languages and 10 nationalities represented at the firm. We have depth in-house.”
Although they all travel, “in-house” means the entire investment team is based in San Francisco and not in Asia. It’s done intentionally, as investment decisions are made away from the “noise” of the markets and in collaboration with other members of the team.
Lowe added that his focus had “nothing in banks and we are benchmark agnostic. Benchmarks are backwards looking.”
A particular point of satisfaction, he says, is how rewarding it is to see advisors change their opinion on China, now making it a core strategy as part of the portfolio.