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 28/06/2022)


Price (USD)

(as of 28/06/2022)

$94.26 million

Fund Assets

(as of 31/05/2022)


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 $94.26 million (31/05/2022)
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 31/03/2022 1.00% ( USD ) 1.00% ( GBP )


  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
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As of 31/05/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
2.55% -14.37% -23.27% -37.73% 4.74% 5.41% 5.98% 4.56% 26/02/2010
MSCI China Index (USD)
1.19% -10.70% -16.71% -35.86% 0.01% 1.46% 5.24% 3.69%
Matthews China Fund (GBP)
2.29% -8.93% -17.83% -29.86% 4.65% 5.82% 8.22% 6.20% 28/02/2011
MSCI China Index (GBP)
0.81% -4.93% -10.49% -27.66% 0.01% 1.95% 7.37% 5.54%
As of 31/03/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
-9.07% -18.52% -18.52% -29.94% 3.34% 8.35% 5.71% 5.15% 26/02/2010
MSCI China Index (USD)
-8.00% -14.19% -14.19% -32.47% -2.88% 3.67% 4.76% 4.00%
Matthews China Fund (GBP)
-7.27% -16.33% -16.33% -26.51% 3.22% 7.25% 7.84% 6.47% 28/02/2011
MSCI China Index (GBP)
-6.24% -11.73% -11.73% -29.24% -3.21% 2.60% 6.80% 5.49%
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 31/03/2022
Name 2022 2021 2020 2019 2018 Inception Date
Matthews China Fund (USD)
-29.94% 61.17% -2.29% -5.73% 43.53% 26/02/2010
MSCI China Index (USD)
-32.47% 43.81% -5.66% -6.08% 39.15%
Matthews China Fund (GBP)
-26.51% 44.59% 3.51% 1.39% 27.27% 28/02/2011
MSCI China Index (GBP)
-29.24% 29.24% -0.86% 1.11% 24.04%

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 31/05/2022)
Fund Benchmark
Number of Positions 62 739
Weighted Average Market Cap $89.4 billion $128.3 billion
Active Share 73.2 n.a.
P/E using FY1 estimates 13.3x 10.2x
P/E using FY2 estimates 11.4x 9.2x
Price/Cash Flow 12.8 6.0
Price/Book 2.3 1.4
Return On Equity 12.9 12.5
EPS Growth (3 Yr) 16.4% 14.6%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/05/2022)
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 31/05/2022)
Name Sector % Net Assets
Alibaba Group Holding, Ltd. Consumer Discretionary 8.4
Meituan Consumer Discretionary 6.6
Tencent Holdings, Ltd. Communication Services 5.7, Inc. Consumer Discretionary 5.4
Pinduoduo, Inc. Consumer Discretionary 5.1
China Merchants Bank Co., Ltd. Financials 4.2
China International Capital Corp., Ltd. Financials 3.9
CITIC Securities Co., Ltd. Financials 3.3
Shenzhen Inovance Technology Co., Ltd. Industrials 2.3
Wuliangye Yibin Co., Ltd. Consumer Staples 2.1
TOTAL 47.0

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 31/05/2022)
  • 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 48.1
SAR (Hong Kong) 33.1
H Shares 10.4
Overseas Listed Companies (OL) 7.5
Cash and Other Assets, Less Liabilities 0.9

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 24/01/2022)

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


Sherwood  Zhang, CFA photo
Sherwood Zhang, CFA



Period ended 31 March 2022

For the quarter ending 31 March 2022, the Matthews China Fund returned -18.52%, while its benchmark, the MSCI China Index, returned -14.19% over the same period.

Market Environment:

The first quarter of the year was broadly negative and choppy for emerging and Asian equity markets for the third consecutive quarter. Chinese equities were weak led down by the confluence of COVID-19 case spikes resulting in policy-enforced lockdowns in tier one cities, ADR delisting pricing pressures and investor worries that Russia-like sanctions could be implemented upon select Chinese companies. Although macro data in January and February contained upside surprises, the Chinese government’s zero-COVID policy continued to weigh heavily on certain sectors.

The Chinese government announced during the quarter that they favor a 2022 GDP growth rate of “around 5.5%.”  In our opinion, this was an important “stake in the ground” announcement. Because of the significant lockdown pressure on consumption, GDP growth will need to be created elsewhere in the economy in order to reach the 5.5% growth target. We envision a battle between temporary lockdowns and stimulus to unfold. Regardless, we think the government will largely succeed in supporting the Chinese economy and that corporate earnings will remain some of the highest globally in 2022-23.

Performance Contributors and Detractors:

The portfolio’s overweight to A-shares detracted from performance in the first quarter. The A-share markets experienced pull back on weak consumer sentiment given the Chinese government’s zero-COVID policy, and a general property market weakness. The A-share market has also performed well over the past two years, and growth sectors, which have become expensive, are undergoing a healthy correction. Around half of the portfolio exposure is currently to A-shares. Despite the recent pull back in the A-share market, we intend to maintain rather similar levels of exposures and believe that there are still many secularly growing opportunities.

From a sector perspective, financials detracted the most from overall relative performance largely due to the portfolio’s overweight in securities companies, including China Merchants Securities Co. and China International Capital Corp. Securities companies tend to be sensitive to market and trading sentiment and therefore underperformed during this period of market volatility. Longer term, we still view these companies as attractively priced businesses that would benefit from China’s deepening capital markets.

On the other hand, the portfolio’s underweight to U.S. ADRs was beneficial given continued pressure on this space with rising risks of ADR listings, including the onset of the Russia and Ukraine war which weakened sentiment on emerging markets. From a sector perspective, our underweight to U.S. ADRs helped consumer discretionary contribute the most to relative performance while real estate was also a big contributor, aided by our stock selection. Our real estate exposure benefited from our holding in China Overseas Land and Development, which is a state-owned enterprise (SOE) property developer. SOE developers have stronger balance sheets and portfolio managers believe they will benefit from the ability to buy attractively priced assets as the consolidation of real estate continues.

Notable Portfolio Changes:

The portfolio’s A-shares exposure continued to trend up over the quarter to around 50%. Given the selloff in platform companies, we think there is lot of value emerging and added a few names including Pinduoduo, one of China’s largest e-commerce shopping platforms with a focus on lower tier city residents. Platform companies in China continue to be dominant businesses and they are still largely unmonetized at the moment. While there will be a moderation of growth, we do not think that regulations derail these businesses from growth entirely. The focus going forward will be on quality growth is a promising sign.

We also increased exposure to the IT sector, driven by more A-share companies, including semiconductor equipment company Beijing Huafeng Test & Control Technology and semiconductor component company Hangzhou Silan Microelectronics Co. Given the continued geo-political tensions, the self-sufficiency drive in China continues to be a definite path for the country in its next stage of development. We believe Huafeng and Silan Micro stand to benefit from market share gains in this industry where foreign firms are still very dominant in China. To fund some of these new positions, we reduced our exposure to financials. We also reduced some exposure from holdings in communication services, including Tencent Holdings as it had held up relatively well compared to other platform companies, and redeployed capital towards other more attractively valued opportunities.


Looking ahead, we expect that China’s Zero COVID-19 policy will likely linger, especially over the next quarter, and we will be watching the overhang closely as it puts pressure on consumer sentiment. At the same time, the property market continues to be weak, although there are signs that the government is increasingly in the camp of loosening the very tight conditions of the property market. Given these two pressures, we believe there is more support for monetary easing in the second half of 2022 as China’s key goal is still both economic and political stability.

The larger unknown is how U.S. – China relations will pan out. While we see China becoming more willing to make concessions, we have not quite seen the same level of openness from the U.S. This lack of ability to ascertain U.S. – China politics will be a risk that will unfortunately be hard to manage for. Elsewhere, results remain largely in-line with expectations and continued healthy pace of growth is seen with some signs of margin erosion but managed relatively well. We remain more hopeful of an improvement in sentiment given still resilient earnings growth and an increased likelihood of policy easing ahead.

Rolling 12 Month Returns For the period ended 31/03/2022 - I (Acc)
Name 2022 2021 2020 2019 2018 Inception Date
Matthews China Fund (USD)
-29.94% 61.17% -2.29% -5.73% 43.53% 26/02/2010
MSCI China Index (USD)
-32.47% 43.81% -5.66% -6.08% 39.15%
Matthews China Fund (GBP)
-26.51% 44.59% 3.51% 1.39% 27.27% 28/02/2011
MSCI China Index (GBP)
-29.24% 29.24% -0.86% 1.11% 24.04%

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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