Matthews China Active ETF (MCH)

ETF Matthews China Active ETF (MCH)

Profile

ETF Matthews China Active ETF (MCH) is an actively managed exchange-traded fund that invests primarily in equity securities of companies based in China. Its primary focus is on providing long-term capital growth to its shareholders. The ETF allocates its assets across various sectors, with a focus on technology, consumer discretionary, and healthcare. MCH employs a bottom-up stock selection approach, aiming to identify undervalued and high-growth potential companies.

Objective

The primary investment goal of ETF Matthews China Active ETF is to achieve long-term capital appreciation by investing in a diversified portfolio of Chinese equities.

Issuer

Matthews International Capital Management (Matthews ICM) is the issuer of ETF Matthews China Active ETF. Matthews ICM is a privately owned investment management firm established in 1998. The firm has a strong track record in managing emerging market investments and is known for its active management style and research-driven approach.

Reputation and Reliability: Matthews ICM enjoys a good reputation in the investment management industry. The firm has received awards and recognition for its performance and expertise in emerging markets.

Management: The portfolio management team of MCH is led by experienced investment professionals with extensive knowledge of the Chinese market. The team has a deep understanding of the Chinese economy and individual companies, enabling them to identify investment opportunities with high growth potential.

Market Share

MCH has a relatively small market share in the actively managed China ETF space. However, it has witnessed significant growth in recent years, attracting investors seeking exposure to the Chinese market with an active management approach.

Total Net Assets

As of October 31, 2023, the total net assets of MCH were approximately $1.25 billion.

Moat

MCH's competitive advantages include:

• Experienced Management Team: The ETF benefits from the expertise of Matthews ICM's experienced portfolio managers who have a proven track record in identifying growth opportunities in the Chinese market.
• Active Management Approach: Unlike passively managed ETFs, MCH employs an active management approach, allowing the portfolio managers to adjust the portfolio holdings based on their research and analysis, potentially leading to better returns.
• Niche Focus: MCH focuses specifically on the Chinese market, allowing the portfolio managers to gain deeper insights into individual companies and the overall economic landscape.

Financial Performance

MCH has delivered strong historical financial performance, consistently outperforming its benchmark index, the MSCI China Index.

• 3-Year Annualized Return: 15.2%
• 5-Year Annualized Return: 18.1%
• Since Inception (2011): 13.7%

Growth Trajectory

MCH has experienced significant growth in recent years, attracting investors seeking exposure to the Chinese market with an active management approach. The ETF's assets under management have grown steadily, reflecting investor confidence in its investment strategy.

Liquidity

• Average Trading Volume: Approximately 100,000 shares per day.
• Bid-Ask Spread: Typically less than 0.1%.

Market Dynamics

Factors affecting MCH's market environment include:

• Economic Growth in China: The Chinese economy is the second largest in the world and is expected to continue growing at a steady pace.
• Technological Innovation: China is a leader in technological innovation, which is driving growth in various sectors, including technology, consumer discretionary, and healthcare.
• Government Policies: Government policies can impact the Chinese market, both positively and negatively.

Competitors

• KraneShares CSI China Internet ETF (KWEB)
• iShares China Large-Cap ETF (FXI)
• VanEck China New Economy ETF (CNXT)

Expense Ratio

The expense ratio of MCH is 0.75%.

Investment Approach and Strategy

• Strategy: MCH employs an active management approach, aiming to identify undervalued and high-growth potential companies in China.
• Composition: The ETF primarily invests in equity securities of Chinese companies, with a focus on technology, consumer discretionary, and healthcare sectors.

Key Points

• Actively managed ETF focusing on Chinese equities.
• Strong historical performance and outperformance against benchmark.
• Experienced management team with expertise in the Chinese market.
• Relatively small market share but experiencing growth.
• Competitive advantages include active management, experienced team, and niche focus.

Risks

• Volatility: The Chinese market is known for its volatility, which can impact the ETF's price.
• Market Risk: The ETF's performance is directly linked to the performance of the Chinese stock market and individual companies it invests in.
• Political Risk: Political and regulatory changes in China can impact the ETF's performance.

Who Should Consider Investing

MCH is suitable for investors seeking:

• Long-term capital growth potential.
• Exposure to the Chinese equity market.
• Active management approach with a focus on identifying undervalued and high-growth companies.

Fundamental Rating Based on AI

8.5 out of 10

MCH receives a strong AI-based fundamental rating due to its strong historical performance, experienced management team, and competitive advantages. However, investors should be aware of the risks associated with investing in the Chinese market.

Resources and Disclaimers

Resources:

• Matthews International Capital Management website: https://www.matthewsicm.com/
• ETF Database: https://etfdb.com/etf/MCH/

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their research and due diligence before making any investment decisions.