Investors who want a thematic and concentrated approach to their emerging markets exposure should consider the Matthews Asia Innovators Active ETF (MINV ), which offers exposure to innovation in Asia.
Now is an ideal time to add exposure as, beneath the global inflationary headwinds, Asian economies are resetting and innovation is growing.
Michael Oh, portfolio manager for Matthews Asia, said in a September insight that the most important market for MINV is still China, which makes up more than half of the portfolio.
“It has had its challenges of late but we feel that valuations are attractive enough to offset those issues, most of which are largely temporary,” Oh said. “Geopolitical risks will remain but we think the domestic growth story will be more than enough for us to find great opportunities within China. In the short term, we think China remains the biggest swing factor and probably has the most upside potential.”
Oh said the EV space is also looking very interesting, noting that even if the global economy falls into recession, the penetration of EV cars will continue. The firm also anticipates continued investment in both the consumer discretionary and healthcare sectors.
“We’re still seeing healthy growth in internet companies. It is far from a niche market,” Oh said. “Culturally the internet has become a big part of daily life for the Asian consumer and that will grow.”
Oh said there are also specific growth drivers for digital consumer services, citing that fintech is taking off in Southeast Asia and India, where the physical banking infrastructure is poor and as a result, more consumers are fully embracing digital finance.
MINV is a high-conviction and concentrated equity portfolio, investing in innovative companies in Asia ex-Japan, capitalizing on the new economy and rising disposable income in the region. The fund takes an all-cap fundamental approach and is focused on companies with unique offerings that create or expand markets.
Matthews Asia launched two other active ETFs based on existing mutual fund strategies in July, including the Matthews Emerging Markets Equity Active ETF (MEM ) and the Matthews China Active ETF (MCH ).
For more news, information, and strategy, visit our Emerging Markets Channel.