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Matthews Asia Total Return Bond (fka Matthews Asia Strategic Income)

Hi, guys.

Two quick notes.

(1) Teresa Kong, the manager, projects high single- to low-double digit returns in 2021.
We think EM corporates will outperform EM sovereign credits ... EM investors are still largely invested in EM sovereigns, not EM corporates. The EM hard currency corporate market is dominated by Asian issuers, of which more than half are China issuers. Given the V-shaped recovery of China and the positive spillovers onto much of the region, we expect Asia to outperform other EM regions. We also expect Asian corporates to outperform corporates from all other EM regions. When you take into account a yield of about 7.4% in Asia high yield, with help of some credit spread tightening, we are looking at returns of high single digits to 10% next year.
Corporate Emerging Market Debt Poised to Shine in 2021 (12/15/2020)

(2) Ms. Kong is pretty good at her job. I did a quick check at MFO Premium and she's pretty much consistently above average for returns, downside, and risk-adjusted returns. Typically, mid-single digit annual returns. The fund has an R-squared of just 6 against the US bond market and 40-ish against US equities, which likely reflects their corporate bond orientation.

I've owned the fund since launch as a diversifying holding in my fixed income sleeve; T. Rowe Price Spectrum Income is the other fund in that box for me. That's not particularly an argument that the fund (a) is great or (b) makes sense for you, but a potential 9 or 10% fixed-income return has some attraction.

As ever,



  • Thanks @David for sharing this. Ive enjoyed your writeups on this fund over the last 5 years. A nice steady eddy consistent fund which is what I look for.
  • Thank you @David_Snowball, I also have invested with Teresa Kong since the fund inception. Consistency is the hallmark of the fund as you noted in the statistic. Still like Matthews funds for investing in Asia despite recent manager changes.
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