Matthews China Active ETF (MCH)MCH

US ETF Matthews China Active ETF: A Summary

Profile:

Matthews China Active ETF (MCH) is an actively managed ETF that invests in large and mid-cap Chinese equities. It focuses on companies with strong growth potential and seeks to provide investors with long-term capital appreciation. MCH has around 50-60 holdings across various sectors, with a focus on technology, consumer discretionary, and healthcare.

Objective:

The primary goal of MCH is to achieve long-term capital growth by investing in a diversified portfolio of Chinese companies with the potential for significant capital appreciation.

Issuer:

Matthews Asia

• Reputation and Reliability: Matthews Asia is a well-established investment management firm with a long history of managing assets in Asia. It has a strong reputation for its research capabilities and active management approach.
• Management: The portfolio managers of MCH have extensive experience investing in Chinese equities and a deep understanding of the Chinese market.

Market Share:

As of November 2023, MCH has a market share of approximately 0.4% in the China Equity ETF category.

Total Net Assets:

MCH currently manages approximately $300 million in assets.

Moat:

• Active Management: MCH's active management approach allows the portfolio managers to identify and invest in promising Chinese companies that may not be included in traditional index-tracking ETFs.
• Experience and Expertise: The portfolio managers have deep knowledge of the Chinese market and a proven track record of stock selection.
• Niche Focus: MCH's focus on growth-oriented companies provides investors with access to a segment of the Chinese market that is often overlooked by other ETFs.

Financial Performance:

• Historical Performance: MCH has outperformed the MSCI China Index over the past 3 and 5 years.
• Benchmark Comparison: MCH consistently outperformed its benchmark index, demonstrating its successful active management approach.

Growth Trajectory:

• Market Growth: The Chinese economy is expected to continue growing in the coming years, providing tailwinds for Chinese equities.
• ETF Growth: The popularity of actively managed China ETFs is increasing, potentially benefiting MCH.

Liquidity:

• Average Trading Volume: MCH has an average daily trading volume of over 50,000 shares, indicating decent liquidity.
• Bid-Ask Spread: The bid-ask spread for MCH is around 0.1%, reflecting its efficient trading.

Market Dynamics:

• Economic Growth: China's economic growth rate is a key driver of MCH's performance.
• US-China Relations: Tensions between the US and China can impact investor sentiment and affect the Chinese stock market.
• Regulatory Environment: Changes in Chinese regulations can impact the performance of individual companies and the overall market.

Competitors:

• KraneShares CSI China Internet ETF (KWEB) - 28.7% market share
• iShares China Large-Cap ETF (FXI) - 20.5% market share
• Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) - 11.3% market share

Expense Ratio:

MCH has an expense ratio of 0.75%.

Investment Approach and Strategy:

• Strategy: MCH employs an active management approach, seeking to identify and invest in undervalued, high-growth Chinese companies.
• Composition: The ETF holds a diversified portfolio of approximately 50-60 Chinese stocks across various sectors, with a focus on growth-oriented companies.

Key Points:

• Actively managed ETF focused on high-growth Chinese companies.
• Strong track record of outperforming its benchmark index.
• Experienced portfolio management team with deep knowledge of the Chinese market.
• Moderate expense ratio compared to other actively managed China ETFs.

Risks:

• Volatility: Chinese equities are known for their volatility, which can lead to significant fluctuations in the ETF's price.
• Market Risk: MCH's performance is highly dependent on the overall performance of the Chinese stock market.
• Political and Regulatory Risk: Political and regulatory changes in China can impact the performance of individual companies and the overall market.

Who Should Consider Investing:

MCH is suitable for investors seeking long-term capital appreciation from Chinese equities and comfortable with the associated risks. It is particularly appealing to investors who believe in the long-term growth potential of the Chinese economy and favor an active management approach.

Fundamental Rating Based on AI:

7.5/10

MCH receives a 7.5 out of 10 based on its strong historical performance, experienced management team, and active management approach. While its market share is relatively small, the ETF's consistent outperformance and focus on high-growth companies are attractive features for investors seeking exposure to the Chinese market. However, investors should be aware of the inherent risks associated with investing in emerging markets and the potential for volatility.

Resources and Disclaimers:

This analysis used data from the following sources:

• Matthews Asia website: https://www.matthewsasia.com/us/en/funds/etfs/matthews-china-active-etf.html
• ETF.com: https://www.etf.com/MCH
• Yahoo Finance: https://finance.yahoo.com/quote/MCH/

This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.