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Formerly known as the China Discovery Fund.
29/02/2012
Inception Date
5.81%
YTD Return (USD)
(as of 30/10/2026)
$28.94
NAV (USD)
(as of 30/10/2026)
-0.62
1 Day NAV Change
(as of 30/10/2026)
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 that Matthews believes are innovators in their products, services, processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets, 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. In addition, because the Fund concentrates its investments in a single-country, its share price may be more volatile, and more affected by political, economic and other events in the country in which it invests than that of funds that are not as geographically concentrated.
These and other risks associated with investing in the Fund can be found in the prospectus.
| Inception Date | 29/02/2012 | |
| Fund Assets | $231.57 million (30/09/2026) | |
| Base Currency | USD | |
| ISIN: | LU0721876877 (USD) LU2075925870 (GBP) | |
| Bloomberg Symbol | MACSMCI:LX (USD) MACSCIG: LX (GBP) | |
| Benchmark | MSCI China All Shares Index | |
| Geographic Focus | China and Taiwan: China includes its administrative and other districts, such as Hong Kong. | |
| SFDR Classification | Article 8 | |
| Management Fee | 1.00% | |
| Total Expense Ratio | 1.25% ( USD ) 1.25% ( GBP ) | |
| Objective | Seeks to achieve long term capital appreciation. |
| Strategy | 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 that Matthews believes are innovators in their products, services, processes, business models, management, use of technology, or approach to creating, expanding or servicing their markets, 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. |
| 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. 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. In addition, because the Fund concentrates its investments in a single-country, its share price may be more volatile, and more affected by political, economic and other events in the country in which it invests than that of funds that are not as geographically concentrated.
The risks associated with investing in the Fund can be found in the prospectus |
Effective April 30, 2026, in connection with changes to the Fund’s name from China Discovery Fund to China Innovators Fund and principal investment strategies, the primary benchmark was changed from the MSCI China Small Cap Index to the MSCI China All Shares Index USD.
Source: Brown Brothers Harriman (Luxembourg) S.C.A.
All returns over 1 year are annualized
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.
Sources: Factset Research Systems, Inc.
Fund Risk Metrics are reflective of Class I USD ACC shares.
Source: FactSet Research Systems
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
Sector data based on MSCI’s revised Global Industry Classification Standards. For more details, visit www.msci.com.
The Portfolio’s market cap exposure breakdown presented is used for comparison purposes and the definition of the capitalization breakdown is from MSCI.
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.
Board Diversity: Represents the weighted average ratio of female board members in investee companies.
Tobacco: Represents companies that generate more than 5% of revenue from tobacco manufacturing exposure to 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.
Controversial weapons include companies with involvement in the following: anti-personnel mines; biological and chemical weapons; cluster weapons; depleted uranium; nuclear weapons and white phosphorus. A company is excluded if it is directly involved in the production, selling and/or distribution of (parts of) controversial weapons and this involvement concerns the core weapon system, or components/services of the core weapon system that are tailor-made and essential for the lethal use of the weapon.
Source: Sustainalytics, Factset, MSCI, Matthews Asia.
| 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 ESG-Related Investment Policy of Matthews Asia Funds.
Portfolio Manager
Tiffany Hsiao is a Portfolio Manager at Matthews. She originally joined Matthews in April 2014 and departed in August 2020 to launch a China-focused private fund at Artisan Partners. Prior to her departure, Tiffany managed the firm’s China Small Companies, former Asia Small Companies (now Emerging Markets Small Companies) and Asia Innovators strategies. Previously, she was a Vice President at Goldman Sachs Investment Partners in Hong Kong and Tokyo from 2007 to 2013, responsible for Asia Pacific investments with an emphasis on equities in China. Previous to this, she spent six years at Franklin Templeton Investments, where she managed the firm’s global communications fund. Tiffany earned her Master of Science and Information Technology from Carnegie Mellon University and received a B.A. in Economics from the University of California, Berkeley. She is fluent in Mandarin and Taiwanese, and conversational in Cantonese.
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.
The MSCI All Country Asia ex Japan Index is a free float–adjusted market capitalization–weighted index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI All Country Asia Pacific Index is a free float–adjusted market capitalization–weighted index of the stock markets of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Index is a free float-adjusted market capitalization-weighted index of Chinese equities that includes H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges, Hong Kong-listed securities known as Red chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China) and foreign listings (e.g. ADRs).
The MSCI China All Shares Index captures large and mid-cap representation across China A shares, B shares, H shares, Red chips (issued by entities owned by national or local governments in China), P chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g. ADRs). The index aims to reflect the opportunity set of China share classes listed in Hong Kong,Shanghai, Shenzhen and outside of China.
The MSCI China A Onshore Index captures large and mid cap representation across China securities listed on the Shanghai and Shenzhen exchanges. Index is for comparative purposes only and it is not possible to invest directly in an index.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets ex China Index is a free float-adjusted market capitalization-weighted index that captures large and mid cap representation across 23 of the 24 Emerging Markets (EM) countries excluding China: Brazil, Chile, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
The MSCI Emerging Markets Small Cap Index is a free float-adjusted market capitalization weighted small cap index of the stock markets of Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungry, India, Indonesia, Kuwait, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, South Korea, Taiwan Thailand, Turkey and United Arab Emirates.
The S&P Bombay Stock Exchange 100 (S&P BSE 100) Index is a free float–adjusted market capitalization–weighted index of 100 stocks listed on the Bombay Stock Exchange.
The MSCI Japan Index is a free float–adjusted market capitalization–weighted index of Japanese equities listed in Japan.
The MSCI All Country Asia ex Japan Small Cap Index is a free float–adjusted market capitalization–weighted small cap index of the stock markets of China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Philippines, Singapore, South Korea, Taiwan and Thailand.
The MSCI China Small Cap Index is a free float-adjusted market capitalization-weighted small cap index of the Chinese equity securities markets, including H shares listed on the Hong Kong exchange, B shares listed on the Shanghai and Shenzhen exchanges,Hong Kong-listed securities known as Red Chips (issued by entities owned by national or local governments in China) and P Chips (issued by companies controlled by individuals in China and deriving substantial revenues in China), and foreign listings (e.g., ADRs).
The MSCI India Index is a free float-adjusted market capitalization-weighted index of Indian equities listed in India.
Indexes are for comparative purposes only and it is not possible to invest directly in an index.
Commentary
Period ended 30 September 2026
Summary
Market Review
Chinese equities delivered mixed results during the third quarter, with a wide gap between more resilient Hong Kong-listed shares and weaker mainland technology and growth companies.
The AI hardware trade reversed against a backdrop of higher global rates and continued U.S.-Iran tensions. The September 24 Trump-Xi summit signaled a constructive tone on trade and AI cooperation but failed to deliver substantive semiconductor export relief. Calls from U.S. senators for tighter AI export controls and proposed sanctions on Chinese optical-module suppliers added pressure to the sector, which gave back some strong gains from earlier in the year.
Onshore technology stocks also faced headwinds from tighter enforcement of investment mandate compliance and capital rotation ahead of the Chinese chipmaker, CXMT Corp.’s IPO which created short-term pressure across the domestic semiconductor supply chain. Notably, CXMT overtook Tencent in market capitalization less than three weeks after its July listing.
Policy support remained robust but offered limited relief, despite China’s introduction of its first nationwide mortgage-interest subsidy for first-time buyers. Large-language-model companies fell more than 30% as competition intensified and U.S. developers pushed to restrict Chinese access to advanced models.
With mainland markets closed for Golden Week at the start of October, investor activity is expected to remain cautious ahead of third-quarter earnings amid persistent macro uncertainty.
3Q 2026 Performance
The China Innovators Fund returned -21.87%, (I Acc USD) while its benchmark, the MSCI China All Shares Index, returned -2.73% over the same period. Performance was primarily attributed to selection. Information Technology was the main source of weakness, followed by Industrials and our underweight in financials.
Information Technology
Information Technology was the largest detractor during the quarter. Kingboard Laminates, a manufacturer of copper-clad laminates used in printed circuit boards, declined approximately -70% following a strong earlier advance, as investors reassessed its valuation and exposure to AI-related demand. Wuxi NCE Power, a power-semiconductor manufacturer, declined about -46%. ACM Research, a wafer-cleaning and other semiconductor-manufacturing equipment supplier fell -36%, while ASMPT, semiconductor-assembly, packaging and surface-mount technology company, declined -34%, amid weaker sentiment toward the semiconductor supply chain and continued export-control concerns. Beijing Huafeng Test & Control Technology, which develops automated test equipment used to assess semiconductor performance and quality, fell about -29% despite the company’s longer-term position in China’s domestic semiconductor-equipment market.
These declines were partly offset by gains in Lenovo and Mediatek Inc. Lenovo, a global personal-computer manufacturer with expanding exposure to servers, infrastructure solutions and AI-enabled devices, rose about 49%, supported by better-than-expected results and stronger demand for AI hardware and infrastructure solutions. Mediatek Inc, a fabless IC design company focused on AI and mobile technologies, gained about 16.4%, supported by exposure to higher-performance computing applications.
Industrials
Industrials also detracted, with performance varying across holdings. Acter Technology Integration, which provides engineering and facility-integration services for high-technology manufacturing plants and data centers, declined about -49% as investors reduced exposure to electronics-infrastructure companies. These losses were partly offset by SITC International, an Asia-focused container-shipping and logistics company, which rose about 57%, supported by resilient intra-Asian shipping demand. Robotechnik Intelligent Technology, a supplier of automation equipment for advanced manufacturing, including production-line systems for electronics and related industries, and gained about 43%, while Sany Heavy Equipment International, a manufacturer of mining and industrial machinery, advanced about 26%.
Year-to-Date Performance
Despite the difficult third quarter, year-to-date performance remained strong. The Fund returned 24.61%, compared with -7.58% for the MSCI China All Shares Index. Relative performance was driven primarily by stock selection in Information Technology and Materials, with additional support from Industrials, Consumer Discretionary, Energy and Communication Services.
Information Technology
Information Technology was the largest contributor to year-to-date outperformance, highlighting the Fund’s innovation enablers. Optical communications and photonics holdings benefited from AI data-centre investment, while semiconductor equipment and memory-chip companies gained from China’s technology self-sufficiency drive. LandMark Optoelectronics, Montage Technology, ACM Research and Beijing Huafeng Test & Control Technology contributed across optical components, memory interfaces and domestic semiconductor manufacturing and testing equipment. Taiwanese semiconductor, advanced-packaging and electronics holdings added further exposure to the infrastructure underpinning AI development.
Materials and Industrials
Materials contributed positively over the first nine months. Jiangsu Boqian New Materials was among the stronger performers, supported by demand for its nanometer-scale metal powders used in electronics and AI-related hardware, although the holding gave back part of its earlier gains in the third quarter. Grace Fabric Technology, Shenzhen Megmeet Electrical and Hongfa Technology also contributed, reflecting the breadth of the Fund’s innovation-enabler exposure across advanced materials, power management, industrial components and technology infrastructure. Within Industrials, SITC International benefited from resilient intra-Asian trade flows, while Yantai Jereh Oilfield Services was supported by continued energy-sector capital expenditure.
Principal Detractors
The main year-to-date detractors included Universal Scientific Industrial, CATL, Kingsoft Cloud, DPC Dash, Acter Technology Integration, Duality Biotherapeutics and Neway Valve. CATL faced concerns over battery-supply diversification and greater in-house production by electric-vehicle manufacturers. Kingsoft Cloud underperformed amid investors reassessment of AI-cloud monetization prospects, despite improved revenue growth and a narrower attributable loss. Limited exposure to Financials also detracted as Chinese banks generated positive benchmark returns, while stock selection in Health Care weighed on relative performance.
Positioning
During the quarter, the portfolio continued to evolve from a more concentrated semiconductor- and AI-hardware-oriented allocation toward a broader representation of innovation opportunities across Greater China. Select Information Technology and Materials holdings were reduced following strong earlier performance and a less favorable near-term risk-reward profile. Capital was redeployed toward more attractively valued innovation adopters across Consumer Discretionary, Communication Services and Health Care, including businesses applying technology to consumer services, digital platforms and drug development. These changes broadened potential sources of return while remaining consistent with the Fund’s innovation enablers and adopters framework. Cash was maintained at a higher level to support selective investment as valuations adjusted.
Two new positions illustrate this approach. Luckin Coffee was added as a consumer technology adopter. The company combines a large store network with app-based ordering, digital customer engagement and a data-led approach to store expansion and product development. We believe this model provides exposure to the ongoing formalization and digitalization of China’s coffee market, while the company’s scale may support operating efficiency and product innovation.
Jiangsu Hengrui Pharmaceuticals was also initiated to increase exposure to domestically developed medicines and China’s expanding role in global pharmaceutical research. The company has a broad pipeline across oncology and other therapeutic areas and has entered licensing and collaboration agreements with global pharmaceutical partners. We believe its research platform, clinical-development capabilities and potential to monetize pipeline assets internationally provide a differentiated source of innovation exposure.
Kingboard Laminates was exited after a strong earlier share-price advance left the valuation less compelling and the position more exposed to changes in sentiment toward AI-related printed circuit board demand. The exit reduced concentration in hardware-linked beneficiaries and helped fund additions in areas with different demand drivers.
Outlook
The recent correction in China's innovation-related equities is viewed as having created attractive long-term entry points across several areas of the market. Near-term sentiment remains challenged by geopolitical uncertainty, export-control concerns and a soft domestic macroeconomic backdrop. China's late-September stimulus measures were generally viewed as designed to keep economic growth on target rather than deliver a broad demand revival, and disappointed markets that had hoped for more forceful intervention.
The economy increasingly resembles a K-shaped recovery, where companies with strong products, technology leadership and competitive advantages continue to gain market share, while weaker businesses remain under pressure. This environment reinforces the importance of disciplined stock selection and the need to be dynamic.
Recent on-the-ground research in Hong Kong, Shenzhen, Shanghai and Wuxi included meetings with portfolio companies, public and private peers, competitors and prospective investments across artificial intelligence, renewable energy, automation, semiconductors and consumer industries. These meetings reinforced our conviction in China's progress in AI technology localisation and Taiwan's capabilities in advanced packaging and optical communications. Within artificial intelligence, we prefer picks and shovels to leverage China’s AI growth rather than investing in pure play AI model companies themselves.
Our discussions also supported a selective approach at this point: maintaining exposure to businesses that enable domestic computing, semiconductor and industrial capabilities while broadening the portfolio toward adopters with established end markets, clearer monetization pathways and company-specific growth drivers.
We remain encouraged by the earnings outlook of many portfolio holdings as China's broader innovation ecosystem continues to evolve.
Rolling 12 Month Returns For the period ended 30/09/2026 - I (Acc)
Sources: Brown Brothers Harriman (Luxembourg) S.C.A, Matthews Asia, FactSet Research Systems, Bloomberg