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Matthews International Capital Management (Matthews Asia)

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Long-Term Focus and Active Management

We believe a long-term approach is the most effective way to capitalize on Asia’s evolution. We look to invest in companies whose potential has yet to be fully recognized by the market, where widely used indices are rarely representative. We employ a fundamental, bottom-up investment process that seeks to identify companies with sustainable long-term growth prospects, strong business models, quality management teams and reasonable valuations.

ESG Considerations

We believe governance influences social and environmental factors, providing a starting point for analysis across all holdings. We take a differentiated approach to ESG integration at the fund level. In addition to identifying risks, ESG factors can help identify opportunities. As incomes rise across Asia, domestic consumers will seek to improve the quality of their lives, creating opportunities for businesses.

A Client-Centric Culture

As a fiduciary, we have a legal and ethical obligation to act in our clients’ best interest. This begins with understanding clients’ goals and creating investment solutions designed to support those goals over the long term. It continues with maintaining and enforcing a Conflicts Policy and Code of Ethics for all employees and aligning employee incentives with clients’ interests over the long term.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

A Strong Focus on Corporate Governance

Paul Matthews, founder of Matthews Asia, started our firm with a strong belief in the long-term growth potential of Asia. He also fostered a culture of carefully considering corporate governance as part of our due diligence process. We have a deep appreciation of corporate governance. Good governance is important in all companies in which we invest, and especially those located in emerging and frontier markets. When assessing management quality, we look at how well a company articulates and executes its long-term vision. We believe high-quality businesses run by capable and principled managers are healthier and more sustainable. Our business-quality assessment also includes determining the ability of a company to grow sales and profits with attractive returns over the long term.

We require trust, transparency and accountability from our investee companies. As part of our proprietary investment research, we typically consider a company’s:

  • Track record for allocating capital

  • Board quality, diversity and composition

  • Alignment of incentives for controlling shareholders, minority shareholders and management

  • History of protecting minority stakeholder rights, especially in a crisis

  • Ability to attract and retain talent

  • Exposure to regulatory, market and other risks

  • Management of material environmental and social risk

  • Potential for successfully entering new areas of business by leveraging existing strengths

To develop a 360-degree view of investee companies, our due diligence process includes meetings with one or more of the following stakeholders: company management, employees, customers, suppliers, research and civic organizations. This helps us gauge the strength and quality of management teams, as well as the viability of a company’s business model. We may also consider a company’s potential for successfully entering new areas of business by leveraging existing strengths. In markets that are rapidly growing and still inherently inefficient, we believe identifying companies with strong corporate governance is essential to helping manage our clients’ investments.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Matthews Asia has adopted a Code of Ethics (the “Code”) in order to mitigate and manage conflicts of interest that may exist or arise in connection with personal securities transactions by us or our officers and employees. Below is a brief summary of the Code. We will provide a copy of the Code to any client or prospective client upon request.

The Code contains restrictions on personal securities transactions applicable to all our officers and employees. The Code includes a standard of business conduct requiring officers and employees who are Access Persons:

  • To comply with applicable laws.
  • To report their personal securities transactions to our compliance department.
  • To acknowledge their receipt of, and agreement to observe, the requirements of the Code.
  • To report any violations of the Code to our Chief Compliance Officer (“CCO”).

To reduce potential conflicts of interest, the Code prohibits all officers and employees from investing in the securities of Asia Pacific companies.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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