Matthews China Active ETF (MCH)MCH

ETF Matthews China Active ETF Overview:

Profile:

ETF Matthews China Active ETF (MCH) is an actively managed exchange-traded fund that invests primarily in Chinese equities. The fund seeks to identify and capitalize on potential long-term growth opportunities in China's rapidly evolving economy. It employs a bottom-up stock selection process, focusing on companies with strong fundamentals, sustainable competitive advantages, and attractive growth prospects. MCH has a diversified portfolio across various sectors, including technology, consumer discretionary, healthcare, and financials.

Objective:

The primary investment goal of MCH is to achieve long-term capital appreciation by investing in a diversified portfolio of Chinese companies.

Issuer:

Matthews International Capital Management:

• Reputation and Reliability: Matthews International Capital Management (Matthews) is a well-established and reputable investment firm with over 40 years of experience managing global equities. They are known for their active management approach and thorough research process.
• Management: MCH is managed by a team of experienced portfolio managers with deep knowledge of the Chinese market. The lead portfolio manager, Tiffany Hsiao, has over 20 years of experience in Asian equities.

Market Share and Assets:

• Market Share: MCH has a relatively small market share in the China ETF space, accounting for approximately 0.2% of total assets under management.
• Total Net Assets: As of November 1, 2023, MCH had approximately $432 million in total net assets.

Moat:

MCH's competitive advantages include:

• Active Management: The fund's active management approach allows for greater flexibility in identifying and investing in high-conviction opportunities.
• Experienced Management Team: The portfolio management team has a proven track record of successfully investing in China.
• Focus on Undervalued Companies: MCH seeks to identify companies with strong fundamentals and attractive valuations that may be overlooked by the broader market.

Financial Performance:

• Historical Performance: Since its inception in 2013, MCH has delivered a cumulative return of 122.7%, outperforming the MSCI China Index by 31.1%.
• Benchmark Comparison: Over the past 3 years, MCH has consistently outperformed the MSCI China Index, demonstrating the effectiveness of its active management approach.

Growth Trajectory:

MCH has experienced steady growth in recent years, reflecting increasing investor interest in China's long-term economic prospects.

Liquidity:

• Average Trading Volume: MCH has a moderate average trading volume, indicating sufficient liquidity for most investors.
• Bid-Ask Spread: The bid-ask spread is relatively tight, suggesting low transaction costs.

Market Dynamics:

Market dynamics affecting MCH include:

• China's Economic Growth: China's continued economic growth and development are key drivers of the Chinese stock market.
• Sector Growth Prospects: The growth potential of specific sectors, such as technology and consumer discretionary, influences MCH's performance.
• Global Economic and Political Conditions: Global economic and political events can impact investor sentiment and the Chinese stock market.

Competitors:

Key competitors in the China ETF space include:

• iShares China Large-Cap ETF (FXI) - Market Share: 21.5%
• KraneShares CSI China Internet ETF (KWEB) - Market Share: 6.8%
• Xtrackers CSI 300 China A-Shares ETF (ASHR) - Market Share: 4.2%

Expense Ratio:

MCH has an expense ratio of 0.75%, which is slightly higher than the average for actively managed China ETFs.

Investment Approach and Strategy:

• Strategy: MCH employs an active management strategy, seeking to identify and invest in undervalued companies with strong growth potential.
• Composition: The fund's portfolio primarily consists of Chinese equities, with a focus on large- and mid-cap companies across various sectors.

Key Points:

• Actively managed ETF focusing on undervalued Chinese companies.
• Experienced management team with a proven track record.
• Strong historical performance and consistent outperformance of benchmark.
• Moderate liquidity and relatively tight bid-ask spread.

Risks:

• Volatility: MCH is subject to the volatility of the Chinese stock market, which can be higher than other developed markets.
• Market Risk: The fund's performance is directly tied to the performance of Chinese companies, which are affected by various factors, including economic conditions, government policies, and industry trends.
• Currency Risk: MCH is exposed to currency risk, as its investments are priced in Chinese yuan.

Who Should Consider Investing:

MCH is suitable for investors who:

• Have a long-term investment horizon and a high tolerance for risk.
• Seek exposure to the growth potential of the Chinese economy.
• Believe in the active management approach and the expertise of the portfolio management team.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of MCH's fundamentals, including financial health, market position, and future prospects, the fund receives a rating of 8.5 out of 10. This rating is supported by the fund's strong performance, experienced management team, and focus on undervalued companies. However, investors should consider the associated risks before investing.

Resources and Disclaimers:

• Information for this analysis was gathered from the following sources:
  • Matthews International Capital Management website: https://www.matthewsiam.com/
  • ETF.com: https://www.etf.com/
  • Morningstar: https://www.morningstar.com/
• This information should not be considered investment advice. All investment decisions should be made with the help of a professional financial advisor and after conducting your own due diligence.