Matthews China Small Companies Fund

  • Seeks alpha in China’s lesser known small entrepreneurial companies
  • Invests in industries that are leveraged to China’s increasingly innovative and dynamic economy driven by fast growing domestic consumer demand
  • Tilt towards higher value-added growth sectors benefiting from innovation and capital efficiency


Inception Date


YTD Return (USD)

(as of 28/11/2023)



(as of 28/11/2023)


1 Day NAV Change

(as of 28/11/2023)


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 small 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 Fund defines Small Companies as companies with market capitalization no higher than the greater of US $5 billion or the market capitalization of the largest company included in the Fund's primary benchmark, the MSCI China Small Cap Index.


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. The Fund invests in smaller companies, which are more volatile and less liquid than larger companies.

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

Fund Facts
Inception Date 29/02/2012
Fund Assets $237.96 million (31/10/2023)
Base Currency USD
ISIN: LU0721876877 (USD) LU2075925870 (GBP)
Benchmark MSCI China Small Cap Index
Geographic Focus China and Taiwan: China includes its administrative and other districts, such as Hong Kong.
Fees & Expenses
Management Fee 1.00%
Total Expense Ratio As of 31/03/2022 1.25% ( USD ) 1.25% ( GBP )


  • Monthly
  • Quarterly
  • Calendar Year
  • Rolling 12 Month
  • data_graph_selected Created with Sketch.
  • bar_graph_selected Created with Sketch.
As of 31/10/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Small Companies Fund (USD)
-6.22% -13.34% -15.53% 4.71% -13.15% 6.76% 5.86% 6.61% 29/02/2012
MSCI China Small Cap Index (USD)
-2.38% -15.45% -24.39% 1.71% -14.76% -6.52% -3.07% -1.36%
Matthews China Small Companies Fund (GBP)
-5.41% -8.30% -16.41% -0.94% -11.24% n.a. n.a. 1.28% 30/01/2020
MSCI China Small Cap Index - GBP (GBP)
-1.80% -10.35% -25.05% -3.50% -12.93% n.a. n.a. -6.77%
As of 30/09/2023
Average Annual Total Returns
Name 1MO 3MO YTD 1YR 3YR 5YR 10YR Since Inception Inception Date
Matthews China Small Companies Fund (USD)
-2.22% 0.27% -9.92% 0.27% -11.29% 4.70% 7.05% 7.25% 29/02/2012
MSCI China Small Cap Index (USD)
-2.17% -6.07% -22.55% -5.99% -13.90% -8.04% -2.49% -1.17%
Matthews China Small Companies Fund (GBP)
1.09% 3.45% -11.63% -9.69% -9.96% n.a. n.a. 2.86% 30/01/2020
MSCI China Small Cap Index - GBP (GBP)
1.56% -2.16% -23.67% -14.02% -12.23% n.a. n.a. -6.46%
For the years ended December 31st
Name 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Matthews China Small Companies Fund (USD)
-30.72% -2.88% 77.70% 31.36% -18.79% 56.47% -1.96% 2.98% -3.20% 34.42%
MSCI China Small Cap Index (USD)
-24.77% -6.26% 27.21% 6.63% -19.53% 24.62% -5.95% 3.48% -0.34% 18.68%
Matthews China Small Companies Fund (GBP)
-22.34% -1.58% n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
MSCI China Small Cap Index - GBP (GBP)
-15.29% -5.39% n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
For the period ended 30/09/2023
Name 2023 2022 2021 2020 2019 Inception Date
Matthews China Small Companies Fund (USD)
0.27% -40.12% 16.28% 69.95% 6.04% 29/02/2012
MSCI China Small Cap Index (USD)
-5.99% -43.27% 19.68% 16.67% -11.71%
Matthews China Small Companies Fund (GBP)
-9.69% -27.08% 10.86% n.a. n.a. 30/01/2020
MSCI China Small Cap Index - GBP (GBP)
-14.02% -31.48% 14.75% n.a. n.a.

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

Unusually high returns may not be sustainable.

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 31/10/2023)
Fund Benchmark
Number of Positions 39 228
Weighted Average Market Cap $5.1 billion $1.2 billion
Active Share 96.5 n.a.
P/E using FY1 estimates 14.7x 7.7x
P/E using FY2 estimates 12.3x 6.5x
Price/Cash Flow 11.3 4.4
Price/Book 2.3 0.7
Return On Equity 12.9 0.5
EPS Growth (3 Yr) 26.1% 12.1%

Sources: Factset Research Systems, Inc.

Risk Metrics (3 Yr Return)

(as of 31/10/2023)
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 31/10/2023)
Name Sector % Net Assets
Alchip Technologies, Ltd. Information Technology 5.5
KE Holdings, Inc. Real Estate 4.5
Full Truck Alliance Co., Ltd. Industrials 4.3
Anhui Yingjia Distillery Co., Ltd. Consumer Staples 4.2
Samsonite International SA Consumer Discretionary 4.1
Jason Furniture Hangzhou Co., Ltd. Consumer Discretionary 4.1
Yangzijiang Shipbuilding Holdings, Ltd. Industrials 3.7
China Overseas Property Holdings, Ltd. Real Estate 3.6
ENN Natural Gas Co., Ltd. Utilities 3.2
Kanzhun, Ltd. Communication Services 3.1
TOTAL 40.3

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 31/10/2023)
  • Sector Allocation
  • Market Cap Exposure
  • China Exposure
Sector Fund Benchmark Difference
Consumer Discretionary 22.9 12.0 10.9
Industrials 21.2 11.5 9.7
Information Technology 15.6 10.2 5.4
Health Care 8.9 24.4 -15.5
Real Estate 8.2 10.4 -2.2
Consumer Staples 8.2 4.1 4.1
Communication Services 4.9 8.9 -4.0
Financials 4.5 5.2 -0.7
Utilities 3.2 3.8 -0.6
Materials 0.0 7.9 -7.9
Energy 0.0 1.5 -1.5
Cash and Other Assets, Less Liabilities 2.4 0.0 2.4

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) 0.0 0.0 0.0
Large Cap ($10B-$25B) 7.5 0.0 7.5
Mid Cap ($3B-$10B) 56.7 4.0 52.7
Small Cap (under $3B) 33.4 96.0 -62.6
Cash and Other Assets, Less Liabilities 2.4 0.0 2.4

The Portfolio’s market cap exposure breakdown presented is used for comparison purposes and the definition of the capitalization breakdown is from MSCI.

The Fund defines Small Companies as companies with market capitalization no higher than the greater of US$5 billion or the market capitalization of the largest company included in the Fund's primary benchmark, the MSCI China Small Cap Index.

China Exposure Portfolio Weight
Hong Kong Listed Companies 40.1
Mainland China Listed Companies 24.0
Other 18.3
ADR/GDR 15.2
Cash and Other Assets, Less Liabilities 2.4

Mainland China listed companies includes A Share and B Shares. 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. B Shares are mainland Chinese companies listed on the Shanghai and Shenzhen stock exchanges, available to both Chinese and non-Chinese investors. ADRs are American Depositary Receipts and GDRs are Global Depositary Receipts. Hong Kong Listed Companies include SAR (Hong Kong) companies, China-affiliated corporations, and H Shares. SAR 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. H Shares are mainland Chinese companies listed on the Hong Kong exchange but incorporated in mainland China. Other represents Chinese companies listed in other countries or non-China companies with a majority of revenue coming from China such as Japan, Singapore, Taiwan and the United States or other non-China companies.

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

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

Winnie  Chwang photo
Winnie Chwang

Lead Manager

Andrew  Mattock, CFA photo
Andrew Mattock, CFA

Lead Manager


Period ended 30 September 2023

For the quarter ending 30 September 2023, the Matthews China Small Companies Fund returned 0.27%, while its benchmark, the MSCI China Small Cap Index, returned -6.07%. 

Market Environment:

The overall environment for China remained challenging as economic data continued to disappoint while negative news about the real estate sector re-emerged. On a more optimistic note, the cadence of policy announcements aimed at supporting China’s property market and domestic consumption seems to make it clear that the government is intent on getting the economy moving again.

Geopolitical engagement between U.S. and Chinese leaders continued as the Chinese government welcomed Commerce Secretary Gina Raimondo to advance talks between the superpowers. Topics of discussion included a focus on re-opening lines of communication between the two countries to resolve problematic issues surrounding trade and intellectual property. There is also the possibility of Xi Jinping will be joining President Biden at the Asia Pacific Economic Cooperation forum in November.

Performance Contributors and Detractors:

From a sector perspective, information technology and real estate were the top two contributors during the quarter. These two sectors outperformed given our Taiwan exposure in technology names that benefited from developments in artificial intelligence (AI) globally. Within real estate, a more consolidated portfolio in the sector allowed it to benefit more from a property management services firm executing on earnings growth. On the other hand, materials and energy sectors were detractors. While these sectors produced positive returns for the index, our minimal weights in these sectors detracted from relative negative attribution.

Among individual holdings, Alchip, application-specific integrated circuit (ASIC) design firm was the top contributor to performance. Alchip continues to see growing penetration and development from customized AI chip designs. Orders for this year and next remain robust. Elite Material, a copper clad laminate company was another top contributor. We believe the company will enjoy higher content cost as AI server chips become a large component of sales. ACM Research, a semi-conductor equipment company was the third top contributor to performance. ACM is benefiting from China’s CapEx in mature node semi-conductor capabilities, and continues to expand into new product ranges.

Conversely, BOE Varitronix, a company principally engaged in the liquid crystal display (LCD) business whose main products include car displays, was among the top detractors to performance. The company underperformed as a result of weaker results largely due to more intense price cuts given softer auto demand in China. Zhejiang Shuanghuan Driveline, principally engaged in the research, development, design and manufacture of mechanical transmission gears, was another detractor to performance. The company’s decision to spin out its reducer division was viewed negatively by the market and the stock de-rated. Yadea, manufacturer of electric bicycles, motorcycles, and scooters, also detracted given increasing concerns of sales channel buildup for the electric scooter industry which could signal signs of price wars had led to profit taking on this stock.

Notable Portfolio Changes:

We continued to consolidate the portfolio over the third quarter by reducing names as the market pull back provided us with the opportunity to add to some existing names that were now cheaper. We added to our holdings in communication services including Zhihu, which operates as a Q&A online content community. The company is like a Quora of China and is very cheap, trading at negative enterprise value (EV). We believe that there is value in an online community that looks for answers in long-tail type of questions. We also added to our consumer discretionary holdings including Tongcheng Travel Holdings. Tongcheng is China's second largest online travel agent (OTA), and recent share price correction provides for an entry point. OTA market landscape is more consolidated and Tongcheng benefits from rising domestic travel. We also trimmed from the information technology sector including reducing our position in OPT Machine Vision as we consolidated our overall sector exposure.


China continues to be grinding its way through a slow economic recovery with continues challenges including a weak property market, weak global demand and weak business confidence. While the government has not offered any bazooka stimulus, more support for the property market was seen throughout the quarter ending in September. Portfolio Managers believe the government continues to be in a position to support its economy further if needed.

Looking into the final quarter of the year, it is hard to see a major recovery in economic growth although comparables will be more favorable. Portfolio Managers will look for the bottoming of the property market and increased efforts to boost business confidence. All in, we are mindful that major catalysts for recovery remain at bay given all of the above, and a still challenging geopolitical environment.


Rolling 12 Month Returns For the period ended 30/09/2023 - I (Acc)
Name 2023 2022 2021 2020 2019 Inception Date
Matthews China Small Companies Fund (USD)
0.27% -40.12% 16.28% 69.95% 6.04% 29/02/2012
MSCI China Small Cap Index (USD)
-5.99% -43.27% 19.68% 16.67% -11.71%
Matthews China Small Companies Fund (GBP)
-9.69% -27.08% 10.86% N.A. N.A. 30/01/2020
MSCI China Small Cap Index - GBP (GBP)
-14.02% -31.48% 14.75% N.A. N.A.

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. 

Index Definitions