Is Matthews China Fund (MCHFX) a Strong Mutual Fund Pick Right Now?

On the lookout for a China - Equity fund? Starting with Matthews China Fund (MCHFX) is one possibility. MCHFX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.


We note that MCHFX is a China - Equity option, an area loaded with different options. China - Equity mutual funds and their investments revolve around stocks in China, Taiwan, and Hong Kong. China's middle class is booming, and its economy reflect this demographic's rise more than the vast export-focused manufacturing one we typically associate with the country. Even if this strategy sounds enticing, you may want to look past MCHFX.

History of Fund/Manager

Matthews Asia is based in San Francisco, CA, and is the manager of MCHFX. Matthews China Fund made its debut in February of 1998, and since then, MCHFX has accumulated about $710.33 million in assets, per the most up-to-date date available. The fund is currently managed by Winnie Chwang who has been in charge of the fund since April of 2014.


Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 8.42%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 18.22%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 14.43%, the standard deviation of MCHFX over the past three years is 21.54%. The standard deviation of the fund over the past 5 years is 22.33% compared to the category average of 15.69%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In MCHFX's case, the fund lost 60.04% in the most recent bear market and outperformed its peer group by 1%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 1.24, so it is likely going to be more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. MCHFX's 5-year performance has produced a negative alpha of -2.75, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.


As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, MCHFX is a no load fund. It has an expense ratio of 1.10% compared to the category average of 1.49%. MCHFX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $2,500, and each subsequent investment should be at least $100.

Bottom Line

Overall, Matthews China Fund ( MCHFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Your research on the China - Equity segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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