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Matthews China A-Share Fund

Snapshot
  • High-conviction, long-only equity portfolio focused on companies benefiting from China’s economic evolution
  • All-cap fundamental GARP approach driven by on-the-ground, proprietary research
  • Focus on “new economy” sectors such as information technology, health care and consumer discretionary

21/07/2022

Inception Date

n.a.

YTD Return (USD)

(as of 10/08/2022)

$10.12

NAV (USD)

(as of 10/08/2022)

+0.05

1 Day NAV Change

(as of 10/08/2022)

Objective

The Sub-Fund’s investment objective is to achieve long-term capital appreciation.

Sustainability

The Sub-Fund promotes environmental and social characteristics according to Article 8 of SFDR. Furthermore, the Sub-Fund uses both activity- and norm-based exclusions. Information relating to the environmental and social characteristics of this Sub-Fund is available in the prospectus.

Strategy

The Fund seeks to achieve its investment objective by investing, directly or indirectly, primarily (i.e., at least 65% of its net assets) in equities of companies listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange and traded and denominated in the currency of China, the renminbi ("China A Shares"). On an ancillary basis, the Fund may invest 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 Fund may invest (whether directly or indirectly) in China A Shares, either directly via a Qualified Foreign Investor (“QFI”) license awarded to the Company, or via the Shanghai-Hong Kong Stock Connect and/or Shenzhen-Hong Kong Stock Connect programs, or indirectly via investment in access products.

Fund Facts
Inception Date 21/07/2022
Fund Assets $5.09 million (31/07/2022)
Base Currency USD
ISIN: LU2459556184 (USD) LU2459556267 (GBP)
Bloomberg Symbol MAFCASI:LX (USD) MATACAI:LX (GBP)
Benchmark MSCI China A Onshore index
Geographic Focus China - China includes its administrative and other districts, such as Hong Kong
SFDR Classification Article 8
Fees & Expenses
Management Fee 0.75%

Risks

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. 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.

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. China listed companies and trading of China A Shares are subject to market rules and disclosure requirements in the China stock market. Any changes in laws, regulations, rules and policies of the China A Share market may affect share prices. There are foreign shareholding restrictions and disclosure obligations applicable to China A Shares. The Fund will be subject to restrictions on trading (including restriction on retention of proceeds) in China A Shares as a result of its interest in the China A Shares. Part of the assets of the Fund may be invested in China A Shares through the use of a Qualified Foreign Investor (“QFI”) license. There are rules and restrictions under current QFI regulations including rules on remittance of principal, investment restrictions, and repatriation of principal and profits. The Fund may invest in China A Shares trading on the Shanghai Stock Exchange and Shenzhen Stock Exchange via Stock Connect which is subject to a daily quota. If the daily quota is exceeded, buy orders will be rejected. Additional risks applicable to using Stock Connect include, but are not limited to, legal/beneficial ownership risk, clearing and settlement and custody risk, suspension risk, differences in trading days, operational risk, regulatory risk, Nominee Arrangements in Holding China A Shares, investor compensation, and taxation risks.

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

Performance

  • Monthly
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As of 31/07/2022
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China A-Share Fund (USD)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 21/07/2022
MSCI China A Onshore index (USD)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Matthews China A-Share Fund (GBP)
n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 21/07/2022

The Fund has commenced operations from 21 July 2022 and performance will not be shown until the fund has reached one year since inception.

Portfolio Characteristics

(as of 31/07/2022)
Fund Benchmark
Number of Positions 39 749
Weighted Average Market Cap $51.2 billion $45.6 billion
Active Share 99.7 n.a.
P/E using FY1 estimates 19.7x 13.7x
P/E using FY2 estimates 16.2x 12.0x
Price/Cash Flow 14.9 7.4
Price/Book 3.1 2.0
Return On Equity 19.1 17.0
EPS Growth (3 Yr) 24.8% 28.7%

Sources: Factset Research Systems, Inc.

Top 10 Holdings

(as of 31/07/2022)
Name Sector % Net Assets
Kweichow Moutai Co., Ltd. Consumer Staples 5.5
Chongqing Changan Automobile Co., Ltd. Consumer Discretionary 4.4
China Tourism Group Duty Free Corp., Ltd. Consumer Discretionary 3.1
Shenzhen Inovance Technology Co., Ltd. Industrials 3.1
Shanghai Jinjiang International Hotels Co., Ltd. Consumer Discretionary 3.0
China Merchants Bank Co., Ltd. Financials 3.0
Zhejiang Shuanghuan Driveline Co., Ltd. Consumer Discretionary 2.9
China Jushi Co., Ltd. Materials 2.9
Shenzhen Mindray Bio-Medical Electronics Co., Ltd. Health Care 2.9
Midea Group Co., Ltd. Consumer Discretionary 2.8
TOTAL 33.6

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 31/07/2022)
  • Sector Allocation
  • Market Cap Exposure
  • China Exposure
Sector Fund Benchmark Difference
Industrials 26.0 17.1 8.9
Consumer Discretionary 16.2 8.2 8.0
Information Technology 13.8 15.6 -1.8
Materials 10.7 14.0 -3.3
Consumer Staples 10.1 13.4 -3.3
Health Care 6.0 8.5 -2.5
Financials 4.8 15.9 -11.1
Real Estate 2.6 1.8 0.8
Utilities 0.0 2.3 -2.3
Energy 0.0 2.0 -2.0
Communication Services 0.0 1.3 -1.3
Cash and Other Assets, Less Liabilities 9.9 0.0 9.9

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 40.5 39.8 0.7
Large Cap ($10B-$25B) 15.2 23.5 -8.3
Mid Cap ($3B-$10B) 26.3 30.3 -4.0
Small Cap (under $3B) 8.1 6.4 1.7
Cash and Other Assets, Less Liabilities 9.9 0.0 9.9
China Exposure Portfolio Weight
A Shares 80.4
B Shares 9.7
Cash and Other Assets, Less Liabilities 9.9

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.

Portfolio Managers

Sherwood  Zhang, CFA photo
Sherwood Zhang, CFA

Lead Manager

 

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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