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 15/10/2021)


Price (USD)

(as of 15/10/2021)

$142.48 million

Fund Assets

(as of 30/09/2021)


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 and emerging market securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. 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.

The risks associated with investing in the Fund can be found in the prospectus.

Fund Facts
Inception Date 26/02/2010
Fund Assets $142.48 million (30/09/2021)
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 31/03/2021 1.10% ( USD ) 1.09% ( GBP )


  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
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As of 30/09/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
-5.25% -13.74% -8.39% 6.92% 15.89% 16.02% 10.06% 7.77% 26/02/2010
MSCI China Index (USD)
-5.01% -18.13% -16.59% -7.24% 6.09% 9.28% 8.90% 6.13%
Matthews China Fund (GBP)
-2.83% -11.04% -6.93% 2.01% 14.72% 15.18% 11.71% 9.20% 28/02/2011
MSCI China Index (GBP)
-3.05% -16.12% -15.43% -11.06% 4.91% 8.47% 10.49% 7.69%
As of 30/09/2021
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
-5.25% -13.74% -8.39% 6.92% 15.89% 16.02% 10.06% 7.77% 26/02/2010
MSCI China Index (USD)
-5.01% -18.13% -16.59% -7.24% 6.09% 9.28% 8.90% 6.13%
Matthews China Fund (GBP)
-2.83% -11.04% -6.93% 2.01% 14.72% 15.18% 11.71% 9.20% 28/02/2011
MSCI China Index (GBP)
-3.05% -16.12% -15.43% -11.06% 4.91% 8.47% 10.49% 7.69%
For the years ended December 31st
Name 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Matthews China Fund (USD)
43.38% 33.92% -19.89% 57.70% -3.95% -0.45% -2.95% 6.75% 11.90% -18.00%
MSCI China Index (USD)
29.67% 23.66% -18.75% 54.33% 1.11% -7.62% 8.26% 3.96% 23.10% -18.24%
Matthews China Fund (GBP)
38.50% 29.88% -15.40% 43.82% 15.48% 4.66% 3.00% 4.49% 7.16% n.a.
MSCI China Index (GBP)
25.66% 18.88% -13.70% 40.97% 20.60% -2.27% 15.00% 2.03% 17.69% n.a.
For the period ended 30/09/2021
Name 2021 2020 2019 2018 2017 Inception Date
Matthews China Fund (USD)
6.92% 41.87% 2.62% 0.99% 33.75% 26/02/2010
MSCI China Index (USD)
-7.24% 33.76% -3.77% -2.05% 33.27%
Matthews China Fund (GBP)
2.01% 36.18% 8.69% 3.70% 29.47% 28/02/2011
MSCI China Index (GBP)
-11.06% 27.50% 1.83% 0.77% 29.03%

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 30/09/2021)
Fund Benchmark
Number of Positions 59 740
Weighted Average Market Cap $132.9 billion $165.0 billion
Active Share 68.8 n.a.
P/E using FY1 estimates 14.3x 12.0x
P/E using FY2 estimates 12.2x 10.8x
Price/Cash Flow 14.1 8.8
Price/Book 2.5 1.8
Return On Equity 17.2 12.8
EPS Growth (3 Yr) 25.8% -4.5%

Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Factset Research Systems, Inc., Zephyr StyleADVISOR, Matthews Asia

Top 10 Holdings

(as of 30/09/2021)
Name Sector % Net Assets
Tencent Holdings, Ltd. Communication Services 9.8
Alibaba Group Holding, Ltd. Consumer Discretionary 7.4, Inc. Consumer Discretionary 6.7
China Merchants Bank Co., Ltd. Financials 4.3
Meituan Consumer Discretionary 4.2
China International Capital Corp., Ltd. Financials 3.8
CITIC Securities Co., Ltd. Financials 3.0
Pharmaron Beijing Co., Ltd. Health Care 2.4
Sungrow Power Supply Co., Ltd. Industrials 2.4
CIFI Holdings Group Co., Ltd. Real Estate 2.1
TOTAL 46.1

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 30/09/2021)
  • 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
SAR (Hong Kong) 46.4
A Shares 28.0
H Shares 20.8
Overseas Listed Companies (OL) 2.8
China-affiliated corporations (CAC) 1.1
Cash and Other Assets, Less Liabilities 1.0

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 June 2021

For the first half of 2021, the Matthews China Fund returned 6.20%, while its benchmark, the MSCI China Index, returned 1.89% over the same period. For the quarter ending 30 June, the Matthews China Fund returned 5.35%, while the benchmark returned 2.32%.

Market Environment:

China equity markets recovered in the second quarter post a volatile first quarter, driven by resilient first quarter results coming out of A-shares. Investors used the opportunity of the correction seen in the first quarter of 2021 to buy back into areas of secular growth including that of health care, consumer discretionary and information technology sectors. On the other hand, real estate in China saw weakness on continued policy tightness. The financials sector also saw a pullback over the second quarter as investors continued their focus on growth opportunities in China.

China’s macro environment remained relatively stable and the central bank's monetary policy remained largely unchanged. Consumption industries in China largely remain on a recovery track although consumption patterns have not entirely recovered to pre-COVID levels. Industrial industries continue to face worries of raw material cost inflation but we note that this is a manageable risk. A slower pace of increase is expected in the second half of the year and a still strong consumer demand will facilitate the ability of companies to pass on costs through higher prices in our view. Valuations in China remain attractive at mid-teens price-to-earnings multiple coupled with low teens earning per share (EPS) growth given that the quality of earnings growth continues to become more secular and higher quality in nature.

Performance Contributors and Detractors:

Strong stock selection drove the Fund’s outperformance in the first half. From a sector perspective, stock selection in financials and information technology contributed to relative performance. Among the portfolio’s financials holdings, our holding in China’s premiere banking franchise, China Merchants Bank Co., did well given attractive valuations and the bank’s ability to continue to provide financial solutions to high net worth individuals. Elsewhere in financials, our holdings in brokerages also did well. Our overweight in brokerages stems from cheap valuations and still strong fundamentals and earnings growth given the brokerages’ ability to expand service offerings as China’s capital markets deepen.

On the other hand, stock selection in the consumer discretionary sector detracted from relative performance. The portfolio’s holding Midea Group Co., a domestic demand-oriented consumer discretionary company, suffered from weaker performance given concerns about rising raw material prices compressing margins. However, we believe that consumer demand still remains resilient in China, which will likely facilitate the ability to pass on prices in the near future. Turning to the real estate sector, a continued tighter policy environment resulted in the weak performance of portfolio holding Times China Holdings, a southern China focused developer. We believe that this presents the opportunity for market consolidation over the longer term, and that leading regional players such as Times China should be able to grow market share under these conditions given their strong balance sheets. Real estate opportunities in China are also attractively valued and may offer high dividend yields making the risk reward still favorable in our view.

Notable Portfolio Changes:

Chinese growth stocks recovered in the second quarter after a healthy correction in the first quarter of 2021. During the second quarter, we continued to take the opportunity to reallocate capital into areas of reasonable valuations and high-quality growth opportunities. We consolidated our smaller positions and added positions in financials, information technology, materials and industrials. 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 and added some holdings over the quarter which increased the Fund’s overall exposures in A-shares.


First quarter earnings in China point to a continued recovery in China’s economy. Encouragingly, China’s economy continues to benefit from growth coming from a broad range of different sectors and industries. As a result, cheaper parts of the market have also seen performance recovery given continued earnings delivery. Looking ahead to the rest of the year, we continue to expect corporate earnings to remain on track. While market concerns of increased regulatory scrutiny may persist over the near term, we remain focused on the longer-term fundamentals of the domestic growth engine. Among the most attractive themes from a secular growth perspective include technology upgrades, health and wellness trends, and services that enhance quality of life and premium consumer goods.

Earnings growth is not representative of the Fund’s future performance.


Rolling 12 Month Returns For the period ended 30/09/2021 - I (Acc)
Name 2021 2020 2019 2018 2017 Inception Date
Matthews China Fund (USD)
6.92% 41.87% 2.62% 0.99% 33.75% 26/02/2010
MSCI China Index (USD)
-7.24% 33.76% -3.77% -2.05% 33.27%
Matthews China Fund (GBP)
2.01% 36.18% 8.69% 3.70% 29.47% 28/02/2011
MSCI China Index (GBP)
-11.06% 27.50% 1.83% 0.77% 29.03%

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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