Matthews Asia to exit fixed income strategy on low client interest

HONG KONG : Asset manager Matthews Asia will close its two bond funds due to sluggish client interest, leaving it with no fixed income products and only equity funds on offer firm-wide, the San Francisco-based company said.

The $14 billion asset manager has decided to liquidate the $65 million Asia Total Return Bond Fund and $16 million Asia Credit Opportunities Fund on or about March 15.

“After a decade of trying to establish and grow the Matthews Asia Total Return Bond Fund and the Matthews Asia Credit Opportunities Fund, shareholder interest and demand for Asia bond strategies has not developed and reached scale as Matthews had anticipated,” Matthews Asia said in a statement to Reuters.

The firm said it remains focused on investing in China, the broader emerging markets and Asia, and it will evaluate fixed income options in the future, including emerging market debt.

The closure of the fixed income products comes after China’s bond defaults hit a record in 2022 amid the years-long clampdown on the property sector and as global investors sold off Asia bonds due to the U.S. Federal Reserve’s interest rate hikes.

The Asia Total Return Bond Fund and Asia Credit Opportunities Fund both declined 12 per cent in 2022, slightly underperforming the J.P. Morgan Asia Credit Index, which dropped 11 per cent.

Both funds are co-managed by Satya Patel and Wei Zhang and it is unclear if they will leave Matthews Asia after the liquidation.

The firm did not reply to questions on the impact on the fixed income team.

Teresa Kong, who was head of fixed income and the former portfolio manager of the two funds, retired in July 2022 after serving at Matthews for 12 years.


Source: Reuters