Asia Growth

Matthews China Fund

  • High-conviction equity portfolio seeks companies benefiting from China’s domestic consumption
  • All-cap fundamental GARP approach driven by on-the-ground, proprietary research
  • Combines long-term core holdings with more opportunistic ideas to provide consistency through cycles


Inception Date


YTD Return (USD)

(as of 24/01/2022)


Price (USD)

(as of 24/01/2022)

$125.16 million

Fund Assets

(as of 31/12/2021)


Seeks to achieve long term capital appreciation.


The Fund seeks to achieve its investment objective by investing, directly or indirectly, at least 65% of its total net assets, in equities of companies located in China, and may invest the remainder of its net assets in other permitted assets on a worldwide basis. For the purpose of this policy, China includes the People’s Republic of China, its administrative and other districts, such as Hong Kong, as well as Taiwan.


The value of an investment in the Fund can go down as well as up and possible loss of principal is a risk of investing. Investments in international, emerging and frontier market securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation, which may adversely affect the value of the Fund's assets. Investing in Chinese securities involve risks. Heightened risks related to the regulatory environment and the potential actions by the Chinese government could negatively impact performance. The Fund invests in holdings denominated in foreign currency, and is exposed to the risk that the value of the foreign currency will increase or decrease. The Fund invests primarily in equity securities, which may result in increased volatility. Investments in a single-country fund may be subject to a higher degree of market risk than diversified funds because of concentration in a specific country.

These and other risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 26/02/2010
Fund Assets $125.16 million (31/12/2021)
Base Currency USD
ISIN: LU0491817440 (USD) LU0594556135 (GBP)
Benchmark MSCI China Index
Geographic Focus China and Taiwan: China includes its administrative and other districts, such as Hong Kong.
Fees & Expenses
Management Fee 0.75%
Total Expense Ratio As of 30/09/2021 1.00% ( USD ) 1.00% ( GBP )


  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
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As of 31/12/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
-3.47% -5.38% -13.32% -13.32% 18.51% 16.03% 8.83% 7.09% 26/02/2010
MSCI China Index (USD)
-3.15% -6.06% -21.64% -21.64% 7.91% 9.52% 7.38% 5.43%
Matthews China Fund (GBP)
-4.51% -5.63% -12.17% -12.17% 16.47% 13.96% 10.36% 8.39% 28/02/2011
MSCI China Index (GBP)
-5.40% -6.48% -20.92% -20.92% 5.72% 7.53% 8.87% 6.84%
As of 31/12/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
-3.47% -5.38% -13.32% -13.32% 18.51% 16.03% 8.83% 7.09% 26/02/2010
MSCI China Index (USD)
-3.15% -6.06% -21.64% -21.64% 7.91% 9.52% 7.38% 5.43%
Matthews China Fund (GBP)
-4.51% -5.63% -12.17% -12.17% 16.47% 13.96% 10.36% 8.39% 28/02/2011
MSCI China Index (GBP)
-5.40% -6.48% -20.92% -20.92% 5.72% 7.53% 8.87% 6.84%
For the years ended December 31st
Name 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Matthews China Fund (USD)
-13.32% 43.38% 33.92% -19.89% 57.70% -3.95% -0.45% -2.95% 6.75% 11.90%
MSCI China Index (USD)
-21.64% 29.67% 23.66% -18.75% 54.33% 1.11% -7.62% 8.26% 3.96% 23.10%
Matthews China Fund (GBP)
-12.17% 38.50% 29.88% -15.40% 43.82% 15.48% 4.66% 3.00% 4.49% 7.16%
MSCI China Index (GBP)
-20.92% 25.66% 18.88% -13.70% 40.97% 20.60% -2.27% 15.00% 2.03% 17.69%
For the period ended 31/12/2021
Name 2021 2020 2019 2018 2017 Inception Date
Matthews China Fund (USD)
-13.32% 43.38% 33.92% -19.89% 57.70% 26/02/2010
MSCI China Index (USD)
-21.64% 29.67% 23.66% -18.75% 54.33%
Matthews China Fund (GBP)
-12.17% 38.50% 29.88% -15.40% 43.82% 28/02/2011
MSCI China Index (GBP)
-20.92% 25.66% 18.88% -13.70% 40.97%

Source: Brown Brothers Harriman (Luxembourg) S.C.A.

Since inception performance for share classes with less than one year of history represents actual performance, not annualised. In addition, for share classes less than a year old, Year to Date Return is calculated since inception. Where no past performance is shown there was insufficient data available in that year to provide performance.

Performance details provided are based on a NAV-to-NAV basis with any dividends reinvested, and are net of management fees and other expenses. Performance data has been calculated in the respective currencies stated above, including ongoing charges and excluding subscription fee and redemption fee you might have to pay.

All performance quoted represents past performance and is not indicative of future performance. Investors may not get back the full amount invested. Investors investing in funds denominated in non-local currency should be aware of the risk of currency exchange fluctuations that may cause a loss of principal.

Additional performance, attribution, liquidity, value at risk (VaR), security classification and holdings information is available on request for certain time periods.

Portfolio Characteristics

(as of 31/12/2021)
Fund Benchmark
Number of Positions 64 739
Weighted Average Market Cap $123.0 billion $156.1 billion
Active Share 69.3 n.a.
P/E using FY1 estimates 15.9x 11.7x
P/E using FY2 estimates 13.8x 10.7x
Price/Cash Flow 16.9 8.5
Price/Book 2.8 1.7
Return On Equity 17.2 13.4
EPS Growth (3 Yr) -18.6% -7.1%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/12/2021)
Upside Capture
Downside Capture
Sharpe Ratio
Information Ratio
Tracking Error

Fund Risk Metrics are reflective of Class I USD ACC shares.

Sources: Zephyr StyleADVISOR

Top 10 Holdings

(as of 31/12/2021)
Name Sector % Net Assets
Tencent Holdings, Ltd. Communication Services 9.5
Alibaba Group Holding, Ltd. Consumer Discretionary 7.8, Inc. Consumer Discretionary 4.4
Meituan Consumer Discretionary 4.4
China Merchants Bank Co., Ltd. Financials 4.3
China International Capital Corp., Ltd. Financials 3.9
CITIC Securities Co., Ltd. Financials 3.1
Sungrow Power Supply Co., Ltd. Industrials 2.4
China Overseas Land & Investment, Ltd. Real Estate 2.1
China Merchants Securities Co., Ltd. Financials 2.1
TOTAL 44.0

Top 10 holdings may combine more than one security from the same issuer and related depositary receipts.

Source: Brown Brothers Harriman (Luxembourg) S.C.A

Portfolio Breakdown (%)

(as of 31/12/2021)
  • Sector Allocation
  • Market Cap Exposure
  • China Exposure

Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit

China Exposure Portfolio Weight
A Shares 50.8
SAR (Hong Kong) 33.4
H Shares 9.4
Overseas Listed Companies (OL) 3.3
China-affiliated corporations (CAC) 2.7
Cash and Other Assets, Less Liabilities 0.4

Definitions: SAR (Hong Kong) companies are companies that conduct business in Hong Kong and/or mainland China. China-affiliated corporations [CAC], also known as "Red Chips," are mainland China companies with partial state ownership listed in Hong Kong, and incorporated in Hong Kong. China A Shares are Mainland Chinese companies incorporated in China and listed on the Shanghai or Shenzhen exchanges, available mostly to local Chinese investors and qualified institutional investors. H Shares are mainland Chinese companies listed on the Hong Kong exchange but incorporated in mainland China. B Shares are mainland Chinese companies listed on the Shanghai and Shenzhen stock exchanges, available to both Chinese and non-Chinese investors. Overseas Listed [OL] companies are companies that conduct business in mainland China but listed in overseas markets such as Japan, Singapore, Taiwan and the United States.

Source: FactSet Research Systems unless otherwise noted.
Percentage values in data are rounded to the nearest tenth of one percent, so the values may not sum to 100% due to rounding. Percentage values may be derived from different data sources and may not be consistent with other Fund literature.


  • 3 YEAR
  • 5 YEAR
  • 10 YEAR
(as of 29/07/2021)

Past performance is no guarantee of future results. High ratings and rankings does not assure favorable performance.

Overall Morningstar RatingTM is reflective of the noted share class. Fund ratings represent an opinion only and are not a recommendation to buy or sell any fund. Copyright ©2021 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is provided for reference purposes only.

The Overall Morningstar®️ Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and (if applicable) ten-year ratings.

Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Portfolio Managers

Andrew  Mattock, CFA photo
Andrew Mattock, CFA

Lead Manager

Winnie  Chwang photo
Winnie Chwang



Period ended 30 September 2021

For the quarter ending 30 September 2021, the Matthews China Fund returned -13.74%, while its benchmark, the MSCI China Index, returned -18.13% over the same period.

Market Environment:

Chinese equities experienced a large sell-off following recent regulatory announcements created on technology and for-profit education and were the weakest performing in the region in the third quarter. In addition, recent economic data has pointed to a slowdown of economic growth which has been compounded by worries of a weaker real estate sector, as China Evergrande Group, one of the country’s largest real estate developers, has run into financial stress. Fears of systemic financial market contagion and the publicized electricity shortages after the government pressed for restrictions of energy production to reduce carbon output contributed to ongoing headwinds. Real estate, consumer discretionary and communication services sectors were weak during the quarter, while cyclical sectors like energy and materials were among the best performers. Mega caps underperformed while mid- and small-cap equities were the most insulated from downside pressure.

Performance Contributors and Detractors:

The Fund’s outperformance during the third quarter was driven by both strong stock selection and sector allocation effects. From a sector perspective, stock selection in financials, consumer discretionary and information technology contributed to relative performance. Among the Fund’s consumer discretionary holdings, Zhongsheng Group Holdings, a luxury auto dealership, contributed to relative performance, given attractive valuations and the continued growth experienced in China’s luxury auto market. In the financials sector, our holdings in brokerages, including CITIC Securities Co. and China Merchants Securities Co., did well. The Fund’s significant allocation to brokerages stems from cheap valuations and still strong fundamentals and earnings growth given their ability to expand service offerings as China’s capital markets deepen. The information technology sector continued to contribute positively to performance year to date, buoyed by Wuxi Lead Intelligent Equipment Co. and Naura Technology Group Co.—electronic equipment companies in the semiconductor and electric vehicle space which continued to benefit from ongoing capital expenditures within these industries as they execute their capacity expansion plans.

On the other hand, the real estate, energy and utilities sectors detracted from relative performance. The portfolio’s real estate holdings KWG Living Group Holdings, a property management services provider, and KE Holdings, a housing transactions platform provider, continued to experience weakness on an ever tightening policy environment—deepening market concerns about the outlook of the overall property market in China in the third quarter. However, given the sharp pull back in valuations, we continue to believe real estate opportunities in China are attractively valued and may offer high dividend yields, making the risk/reward prospects even more favorable. In both the energy and utility sectors, the Fund underperformed given a lack of sector exposure in these areas of the market which have rallied on the back of higher energy prices and efforts to grow renewable energy contributions within the earnings mix of traditional utility companies. We are still assessing the opportunities, but believe that direct opportunities in renewable energy growth can be captured elsewhere in the portfolio, e.g., in industrials and materials.

Notable Portfolio Changes:

During the third quarter, China equities continued to be volatile as real estate concerns weighed on an already fragile market sentiment. We continued to take the opportunity to reallocate capital into growth areas that have experienced a considerable pull back in valuations. We have reduced the Fund’s financials exposure slightly and added positions to sectors such as industrials, materials and consumer discretionary, given still strong secular growth opportunities. Taking an all-shares approach to investing in Chinese equities, we continue to find interesting opportunities in the Hong Kong (H-shares) market in terms of both valuation and quality. We also continue to find opportunities in domestic A-shares.  


First half earnings results announced in the third quarter in China showed continued COVID recovery and were generally encouraging across the board, except for a weaker recovery in some parts of consumption, e.g., consumer staples, which we continue to monitor closely. The first half results also shed some light on potential government directives over the next year, which we believe will be positively directed toward China’s efforts at increased domestic self-sufficiency across a myriad of supply chains (e.g., technology and health care) and environmental efforts to further promote green energy developments in China. We believe there are many opportunities in China that stand to benefit positively from these developments and expect to see meaningful volume expansions, which should help drive positive earnings growth across these supported industries.


Rolling 12 Month Returns For the period ended 31/12/2021 - I (Acc)
Name 2021 2020 2019 2018 2017 Inception Date
Matthews China Fund (USD)
-13.32% 43.38% 33.92% -19.89% 57.70% 26/02/2010
MSCI China Index (USD)
-21.64% 29.67% 23.66% -18.75% 54.33%
Matthews China Fund (GBP)
-12.17% 38.50% 29.88% -15.40% 43.82% 28/02/2011
MSCI China Index (GBP)
-20.92% 25.66% 18.88% -13.70% 40.97%

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg


Performance figures discussed in the Fund Manager Commentary above reflect that of the Institutional Accumulation Class Shares and has been calculated in USD. Performance details provided for the Fund are based on a NAV-to-NAV basis, with any dividends reinvested, and are net of management fees and other expenses. Past performance information is not indicative of future performance. Investors may not get back the full amount invested.

The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.

Information contained herein is sourced from Matthews Asia unless otherwise stated. The views and opinions in this commentary were as of the report date, subject to change and may not reflect the writer’s current views. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the managers reserve the right to change their views about individual stocks, sectors, and the markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund’s future investment intent. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. The information does not constitute a recommendation to buy or sell any securities mentioned.

Investors should not invest in the Fund solely based on the information in this material alone. Please refer to the Prospectus for further details of the risk factors. 

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