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matthews asia pitches aberdeen alternative

The “typical names” associated with investing in Asia and held by the majority of UK portfolios invested in the region will witness increasing competition from US-based Matthews Asia, according to its head of global business development Jonathan Schuman.

matthews asia pitches aberdeen alternative


He said the group has a long-term plan to penetrate the UK market, starting with anchor and retail investors and working up to wealth managers once its Luxembourg-domiciled suite of funds build up assets under management.

The firm’s entire investment team is based in San Francisco and each member undertakes four or five trips to Asia a year.

Schuman said UK investors were used to investing in Asia through firms that have bottom-up strategies but do not necessarily have full-time on the ground presence.

“If you want to construct independent portfolios with independent convictions you are much better off making decisions away from noise after deliberative discussions with your peers,” Schuman added.

He thinks UK investors will relish the opportunity to have an alternative to the “usual suspects” such as Aberdeen and First State, whose funds invested in the region have built up significant assets.

Patience to build

Aberdeen’s Asia Pacific strategy, run by Hugh Young and his team, is £2.2bn, while First State’s Asia Pacific Leaders Fund, run by Angus Tulloch and Alistair Thompson is £6.2bn.

Compared to these behemoths Matthews Asia’s Pacific Tiger Fund, a sub-fund of its Luxembourg-domiciled umbrella Sicav and a mirror of its Pacific Tiger Fund in the US has a long way to go.

Currently it has $8.2m in AUM but Schuman said the company is “quite patient” with respect to the development of any fund launched to the UK market.

“There are certain investors who have their own internal guidelines that require them to invest in certain sized funds,” Schuman admitted.

He said that one way to get around this was to find anchor investors and another is to approach investors that do not necessarily have such criteria.

For this reason he has made the funds available on platforms such as Hargreaves Lansdown, in order to tap straight into the retail market.

“We will have a rather broad set of both retail and financial advisory type clients who invest in the early days of these funds and also some multi-managers who are supportive smaller funds and newer names.

“We will continue to work with those segments of the market while introducing ourselves to wealth managers.”

Capacity constraints

Although Matthews Asia has $19bn in client assets, all of which are in Asian equities, 80% to 85% of these are domiciled in the US. In the past, like Aberdeen and First State with Asia Pacific/emerging market strategies, they have had to soft close funds to protect the liquidity and the ability of the fund to fulfil its mandate for existing investors.

But Schuman assured UK investors he would not launch a strategy into the market place that would soon become capacity constrained, and judging by the Luxembourg version of the Pacific Tiger Fund, some breathing space remains.


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