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 04/10/2023)



(as of 04/10/2023)


1 Day NAV Change

(as of 04/10/2023)


Seeks to achieve long term capital appreciation.


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


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 $81.41 million (31/08/2023)
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.
SFDR Classification Article 8
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 31/08/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
-9.03% 4.75% -11.57% -10.48% -13.30% -0.33% 3.57% 3.15% 26/02/2010
MSCI China Index (USD)
-8.95% 5.00% -4.51% -7.36% -14.14% -3.75% 2.66% 2.51%
Matthews China Fund (GBP)
-7.73% 2.14% -16.06% -17.94% -11.85% 0.15% 5.68% 4.43% 28/02/2011
MSCI China Index (GBP)
-7.55% 2.69% -9.35% -14.93% -12.55% -3.26% 4.73% 4.01%
As of 30/06/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Fund (USD)
2.55% -13.63% -13.43% -23.68% -9.49% -2.57% 4.06% 3.03% 26/02/2010
MSCI China Index (USD)
4.02% -9.65% -5.39% -16.69% -10.13% -5.14% 3.22% 2.47%
Matthews China Fund (GBP)
0.24% -15.52% -17.62% -26.89% -10.39% -1.82% 6.03% 4.34% 28/02/2011
MSCI China Index (GBP)
1.41% -12.13% -10.49% -20.42% -10.98% -4.42% 5.06% 3.96%
For the years ended December 31st
Name 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Matthews China Fund (USD)
-23.62% -13.32% 43.38% 33.92% -19.89% 57.70% -3.95% -0.45% -2.95% 6.75%
MSCI China Index (USD)
-21.80% -21.64% 29.67% 23.66% -18.75% 54.33% 1.11% -7.62% 8.26% 3.96%
Matthews China Fund (GBP)
-14.45% -12.17% 38.50% 29.88% -15.40% 43.82% 15.48% 4.66% 3.00% 4.49%
MSCI China Index (GBP)
-11.95% -20.92% 25.66% 18.88% -13.70% 40.97% 20.60% -2.27% 15.00% 2.03%
For the period ended 30/06/2023
Name 2023 2022 2021 2020 2019 Inception Date
Matthews China Fund (USD)
-23.68% -29.29% 37.40% 21.92% -2.89% 26/02/2010
MSCI China Index (USD)
-16.69% -31.70% 27.54% 13.28% -6.55%
Matthews China Fund (GBP)
-26.89% -19.07% 21.61% 26.13% 0.54% 28/02/2011
MSCI China Index (GBP)
-20.42% -22.30% 14.08% 16.68% -3.06%

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 31/08/2023)
Fund Benchmark
Number of Positions 48 755
Weighted Average Market Cap $101.0 billion $119.9 billion
Active Share 62.9 n.a.
P/E using FY1 estimates 12.2x 10.3x
P/E using FY2 estimates 10.6x 9.2x
Price/Cash Flow 8.8 5.7
Price/Book 1.7 1.3
Return On Equity 11.8 11.3
EPS Growth (3 Yr) 18.9% 13.4%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/08/2023)
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 31/08/2023)
Name Sector % Net Assets
Alibaba Group Holding, Ltd. Consumer Discretionary 8.3
Tencent Holdings, Ltd. Communication Services 7.2
PDD Holdings, Inc. Consumer Discretionary 7.0
Meituan Consumer Discretionary 5.3, Inc. Consumer Discretionary 4.4
China Merchants Bank Co., Ltd. Financials 4.1
China International Capital Corp., Ltd. Financials 3.8
KE Holdings, Inc. Real Estate 3.4
Contemporary Amperex Technology Co., Ltd. Industrials 3.0
CITIC Securities Co., Ltd. Financials 2.8
TOTAL 49.3

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 31/08/2023)
  • Sector Allocation
  • Market Cap Exposure
  • China Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 33.8 31.2 2.6
Financials 20.8 14.9 5.9
Communication Services 14.1 19.9 -5.8
Industrials 8.3 5.3 3.0
Real Estate 5.9 3.1 2.8
Consumer Staples 5.4 5.6 -0.2
Information Technology 5.2 6.0 -0.8
Health Care 4.6 5.6 -1.0
Energy 1.8 3.0 -1.2
Utilities 0.6 2.2 -1.6
Materials 0.0 3.4 -3.4
Liabilities in Excess of Cash and Other Assets -0.4 0.0 -0.4

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

Equity market cap of issuer Fund Benchmark Difference
Mega Cap (over $25B) 65.7 64.6 1.1
Large Cap ($10B-$25B) 24.3 17.4 6.9
Mid Cap ($3B-$10B) 6.6 15.5 -8.9
Small Cap (under $3B) 3.9 2.5 1.4
Liabilities in Excess of Cash and Other Assets -0.4 0.0 -0.4
China Exposure Portfolio Weight
SAR (Hong Kong) 37.7
A Shares 28.7
H Shares 18.8
Overseas Listed Companies (OL) 13.4
Unassigned 1.8
Liabilities in Excess of Cash and Other Assets -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.

ESG Characteristics

(as of 30/06/2023)
  • Business Involvement
  • Sustainability Attributes
Name Fund Benchmark Difference
Controversial Weapons
Fund Coverage: 100% Benchmark Coverage: 98%
0.0 0.0 0.0
Fund Coverage: 100% Benchmark Coverage: 99%
0.0 0.0 0.0
Name Fund Benchmark Difference
UN Global Compact Violators
Fund Coverage: 100% Benchmark Coverage: 100%
0.0 0.0 0.0
Board Diversity
Fund Coverage: 100% Benchmark Coverage: 98%
19.2 18.9 0.3

Board Diversity: Represents the weighted average ratio of female board members in investee companies.
Tobacco: Represents companies that generate revenue from tobacco manufacturing or production or that generate more than 50% of revenue from tobacco retail.
UN Global Compact Violators: Represents companies that have been assessed as failing to comply with the 10 United Nations Global Compact Principles by ISS-ESG Norms-Based Research. Different ESG research providers may come to different conclusions on the severity of the violation.

Source: Sustainalytics, Factset, MSCI, Matthews Asia.

GHG Intensity

(as of 30/06/2023)

Fund Coverage: 100%; Benchmark Coverage: 98% as of 30/06/2023

GHG Intensity: Represents the normalized portfolio’s total weighted average (scope 1 + scope 2) carbon emissions intensity, using the most recently available data (emissions data from 2020, 2021). Carbon intensity represents the issuer’s total carbon emissions per EUR million of revenue (tCO2e divided by EUR million in revenue).

Source: Sourced from ISS ESG. Where not covered by external data providers, we have tried to source these data points.

Sustainability-related Disclosures

This Fund Yes No
Complies with Article 8 of SFDR  
Investment process integrates ESG factors and sustainability risks based on proprietary and third-party research  
Applies norms- and activity-based exclusions  
Promotes environmental and social characteristics  
Has a sustainable investment objective  
Conducts engagement  
Exercises Voting Rights  

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 Fund’s investment objective and risk factors.

For more information, please refer to our Responsible Investment and Stewardship Policy and our Sustainable Finance Disclosure Regulation – Article 10.


  • 3 YEAR
  • 5 YEAR
  • 10 YEAR

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 ©2023 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 30 June 2023

For the first half of 2023, the Matthews China Fund returned -13.43%, while its benchmark, the MSCI China Index, returned -5.39% over the same period. For the quarter ending 30 June 2023, the Fund returned -13.63%, while the benchmark returned -9.65%.

Market Environment:

The overall environment for China remained challenging during the first half of the year with continued negative headlines related to U.S. – China relations, Taiwan – China tensions and an overall bumpy corporate earnings growth story. Financial results in the first quarter were uneven with some sectors and industries recovering faster than others. Given the disruption experienced with much of the population contracting COVID, first quarter earnings were generally still on the weaker side. In areas of faster earnings recovery, many questioned if growth trajectory would be sustainable, as a lack of supportive policies continued to weigh on market sentiment. Given this environment, investors continue to be in profit taking mode despite the fact that some companies have delivered on earnings estimates. At the same time, the property market recovery has been volatile with general market conditions remaining soft. This part of China’s economy continues to be important in determining the stability of the country’s recovery and more monitoring of on-the-ground conditions are required.

Performance Contributors and Detractors:

From a sector perspective, the portfolio’s allocation and stock selection in information technology and an underweight to the materials sector contributed to relative performance during the first half of the year. On the other hand, an overweight allocation and stock selection within the consumer discretionary sector and an underweight and stock selection within communication services detracted from performance.

Among individual holdings, Petrochina and Midea Group were among the top contributors to performance. Petrochina is one of China’s largest state-owned, oil and gas companies. State-own companies (SOEs) in China have seen re-ratings this year due to their defensive nature and cheap valuations. In addition, there has been increased government support to improve valuations of SOEs. Many SOEs are increasingly becoming more market-oriented, and profit driven. This positive change could help with cementing the corporate earnings story for these companies and drive valuation re-rating. Midea is a dominant white goods manufacturer in China. Shares of the company have been defensive year to date due to resilient recovery in the sales of Midea’s air conditioning units, buoyed by a low base, pent-up demand and increased appetite for premiumization. Both valuations and dividend yields of the company are attractive as well, and while Midea is no longer growing at a fast pace, its dominance in the market and strong execution offers investors a stable rate of return, which is appreciated in the more volatile market environment we are experiencing today.

On the other hand,, China’s leading e-commerce platform company known for its authentic products as well as fast and efficient product delivery, was the weakest contributor to performance. The company’s weaker-than-expected first quarter estimates and a conservative outlook caused market concerns in the first quarter. In addition, JD’s major shopping day, June 18, showed only moderate gross merchandise value (GMV) growth. However, shopping campaigns are year-round and consumers are also shopping year-round. While the company’s GMV growth continues to moderate, we find JD’s approach to focusing on optimizing various business units and providing best everyday prices to consumers to be balanced with its profitability goals and targets. The JD e-commerce platform continues to be an important one in China and market worries about competition is likely overdone. Meituan, China’s largest food delivery platform, also detracted from performance during the first half of the year. Meituan also has businesses catering to the promotional and advertising needs of restaurants, and travel and hotel booking services. The company’s shares have been under a lot of pressure given concerns about competition with ByteDance’s Douyin in both food delivery and in-store services. Given Douyin is a strong competitor, there could be some market share loss, but we feel that will be generally manageable. At the same time, Meituan could see operational improvements post COVID as food delivery might see less disruptions as more restaurants are up and running, and in-store dining and travel related services could see recovery.

Notable Portfolio Changes:

Overall, the number of names in the portfolio has decreased and there has generally been a consolidation of smaller, less than 1% positions in more expensive areas of the portfolio. Market correction has given us the opportunity to add to quality areas where valuations have come off meaningfully. The portfolio’s A-share exposure has trended down from the high thirties to low thirties percentage given more attractive valuations in the Hong Kong market and we have been adding to the portfolio’s Hong Kong-listed names.

During the year-to-date period, we added SOE names such as China Construction Bank and PetroChina as we believe good quality SOE names could be more defensive and see valuations re-rating. We also added Kuaishou Technology and JD Health over the first half of the year. Platform companies such as Kuaishou and JD Health have seen valuations correct meaningfully, but the nature of these business still benefit from economies of scale and as these platforms stand to benefit as they get more sizable. Further, many platform companies continue to be on track to delivering better quality earnings and monetization.


Looking ahead, the earnings story should benefit from easier comparables with the second half of 2022. We expect earnings to continue to be a catalyst. However, given weak sentiment, China needs to deliver a very strong set of earnings to re-rate in a meaningful way, and we remain more cautious on that front and expect only a gradual recovery ahead. Variables to be mindful of include whether there will be more stimulus ahead and whether China’s property market conditions continue to improve. Sentiment on the ground remains weak, which could call for more supportive policies. At the same time, we continue to see more companies delivering on monetization and increased room for shareholder return as more companies consider buybacks and dividends. Geopolitics remain a relevant concern, and unfortunately, does not offer much optimism at the moment, leading to continued volatile market conditions.

Rolling 12 Month Returns For the period ended 30/06/2023 - I (Acc)
Name 2023 2022 2021 2020 2019 Inception Date
Matthews China Fund (USD)
-23.68% -29.29% 37.40% 21.92% -2.89% 26/02/2010
MSCI China Index (USD)
-16.69% -31.70% 27.54% 13.28% -6.55%
Matthews China Fund (GBP)
-26.89% -19.07% 21.61% 26.13% 0.54% 28/02/2011
MSCI China Index (GBP)
-20.42% -22.30% 14.08% 16.68% -3.06%

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

To find documents in additional languages, please visit the Fund Literature page in our Resources section.

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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