Matthews China Fund: Andrew Mattock says China is AI’s missing piece

Andrew Mattock’s Case for Deliberate China AI Exposure

Matthews Asia portfolio manager Andrew Mattock told CNBC that investors seeking greater artificial intelligence exposure should target China through a deliberate investment approach. The CNBC article was published on 2026-09-26, and its central portfolio message is specific: a broad emerging-market allocation may not deliver the China AI exposure an investor expects.

China AI exposure, in this context, is a portfolio-construction choice rather than a label attached to any fund with China or emerging markets in its name. Investors must examine what an instrument actually owns, because the available evidence shows meaningful differences among the iShares MSCI Emerging Markets ETF (EEM), the iShares MSCI China ETF (MCHI), the Matthews China Fund (MCHFX), and the KraneShares CSI China Internet ETF.

Why Broad Emerging-Market Exposure Can Miss the Target

Companies from South Korea and Taiwan make up almost half of the iShares MSCI Emerging Markets ETF (EEM), according to CNBC. That composition supports Mattock’s warning that buying a broad emerging-market product does not necessarily create substantial exposure to the Chinese companies at the center of his thesis.

The distinction matters because portfolio labels describe a mandate, not the precise exposure an investor receives. If the objective is targeted participation in China’s artificial-intelligence opportunity, a vehicle whose composition is heavily assigned elsewhere can dilute that objective even while remaining a valid emerging-market holding.

The iShares MSCI China ETF (MCHI) solves the country-allocation issue more directly, though Mattock said it lacks a focus on artificial-intelligence stocks. His argument therefore has two filters: the portfolio must reach China, the world’s second largest economy, and its holdings must also reflect the desired AI emphasis.

Matthews China Fund Concentration Raises the Stakes

The Matthews China Fund (MCHFX) invests at least 80% of its net assets in common and preferred stocks of companies located in China, according to the firm’s website as cited by CNBC. That mandate offers a clearer geographic connection than a broad emerging-market fund, though geographic concentration alone does not establish how much of the portfolio represents artificial intelligence.

Andrew Mattock is behind the Matthews China Fund, whose largest holdings include Tencent and Alibaba. Those positions make the vehicle relevant to the China technology and internet discussion, while the supplied evidence does not disclose every holding or provide company-level AI revenue, earnings, valuation, or operating metrics.

Performance adds an important counterweight to the allocation thesis. The Matthews China Fund (MCHFX) was down 4% so far this year as of Friday’s close. The calendar date represented by that close is not identified, so the relative period should be read exactly as reported rather than converted into a more precise measurement window.

Tencent, Alibaba and the Overlap With KWEB

FactSet identifies Tencent and Alibaba as the same top two holdings of the KraneShares CSI China Internet ETF and the Matthews China Fund. The overlap means investors comparing these vehicles should look beyond their names: distinct wrappers can still place their greatest disclosed emphasis on the same companies.

That common exposure can strengthen participation if those holdings support the intended thesis. It can also reduce diversification across separately purchased funds because owning both vehicles may repeat the same leading positions. The facts establish the overlap, not the complete weight of either company or the full composition of either portfolio.

The performance gap is equally material. The KraneShares CSI China Internet ETF was down more than 27% so far this year as of Friday’s close, compared with the 4% decline reported for the Matthews China Fund over the same stated period. The figures do not reveal why the returns diverged, so attributing the difference to Tencent, Alibaba, artificial intelligence, portfolio weights, or any other cause would go beyond the available evidence.

Key Debates Across MCHFX, MCHI, EEM and KWEB

• Country exposure versus thematic precision: iShares MSCI Emerging Markets ETF (EEM) offers broad emerging-market exposure, while its almost-half composition from South Korea and Taiwan limits how directly it expresses Mattock’s China thesis.
• China exposure versus AI focus: iShares MSCI China ETF (MCHI) targets China more directly, though Mattock said the fund does not emphasize artificial-intelligence stocks.
• Concentration versus diversification: Matthews China Fund (MCHFX) assigns at least 80% of net assets to stocks of companies located in China, creating a deliberate geographic exposure alongside the risks inherent in that concentration.
• Shared holdings versus distinct outcomes: Tencent and Alibaba lead both the Matthews China Fund and the KraneShares CSI China Internet ETF, according to FactSet, even as their reported declines so far this year differ sharply.

David Tepper’s Interest Meets Brendan Ahern’s Risk Control

Interest in China is not confined to the Matthews Asia argument. David Tepper, founder of Appaloosa Management, told CNBC in September 2024 that he had bought more of “everything” related to China. That statement confirms broad interest from Tepper at that time, though it does not specify the instruments, allocations, prices, or subsequent outcomes.

KraneShares chief investment officer Brendan Ahern supplied the balancing view. He recommended considering strategies intended to protect investors from sharp market swings in China and cited options around KWEB [KraneShares CSI China Internet ETF]. His explanation was that hedge funds can write a call in seeking principal protection and some downside coverage.

The pairing of these views defines the central tension. China may provide exposure that broad emerging-market products or a general China ETF do not deliver in the desired form, while the magnitude of KWEB’s decline shows that access to the theme and control of portfolio risk are separate decisions.

What Investors Should Check Next

• Actual holdings: Review whether future disclosed portfolios keep Tencent and Alibaba as the leading positions and whether the broader holdings support the intended artificial-intelligence exposure.
• Composition, not branding: Compare the geographic and thematic allocation of iShares MSCI Emerging Markets ETF (EEM), iShares MSCI China ETF (MCHI), Matthews China Fund (MCHFX), and KraneShares CSI China Internet ETF.
• Relative fund performance: At the next reported close, assess whether the gap between the 4% decline in MCHFX and the decline of more than 27% in KWEB narrows or widens, without assuming a cause before supporting data appear.
• Risk structure: Evaluate Brendan Ahern’s options discussion separately from the underlying China thesis, since a protective strategy changes the exposure structure rather than establishing a future investment outcome.

The Outlook for a Targeted China AI Allocation

The constructive case is that investors may need deliberate fund selection to obtain the China exposure Andrew Mattock considers missing from broad emerging-market portfolios. MCHFX supplies a defined China mandate, and its disclosed major holdings connect it with Tencent and Alibaba; KWEB provides another route whose same top two holdings create clear overlap.

The risk case begins with what the evidence cannot establish. The article provides no complete holdings, current fund or company prices, company-level artificial-intelligence financial metrics, or future return estimates. The reported declines also show that thematic relevance has not translated into positive performance so far this year.

The next decisive evidence is therefore portfolio-specific: updated holdings, the persistence of the Tencent and Alibaba overlap, each fund’s actual AI emphasis, and subsequent relative performance. Until those checks are available, Mattock’s thesis is best treated as an argument for precision in China allocation—not as proof that any named fund will deliver the largest artificial-intelligence gains.

This article was independently written by OneDayTrading from public reporting. Read the original (CNBC)