ETF Education Report: MATTHEWS CHINA DISCOVERY ACTIVE ETF (MCHS)

What this ETF is trying to do

The MATTHEWS CHINA DISCOVERY ACTIVE ETF (MCHS) is an exchange-traded fund listed on the NASDAQ. While the specific investment goal isn't detailed in the data, it holds a variety of different companies. Based on its top holdings, the fund has exposure to various sectors in China.

What the numbers show

The current price of one share is $39.82. To understand how the price has moved, we can look at two different types of returns:

• Price Return: This measures only the change in the share price. The year-to-date (YTD) price return is approximately 22.64%. The one-year price return is approximately 13.70%.

• Total Return: This includes both the share price change and any distributions (cash payments) made to investors. The YTD total return is approximately 22.64%. The one-year total return is approximately 17.78%.

Because the one-year total return (17.78%) is higher than the one-year price return (13.70%), it shows that distributions added to the overall value for investors over that period.

We can also look at an estimated price from roughly one year ago, which was approximately $35.02.

Income and distribution explanation

This ETF provides some cash income through distributions. The distribution yield is approximately 2.91%. This number describes the cash payments relative to the current ETF price. It is important to remember that a distribution yield is not the same as a total return.

The data shows that distributions for this fund are "irregular" or "less frequent," with only one payout recorded in the last 12 months.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly. Some investors worry about this because it can affect the long-term value of their investment.

For MCHS, the erosion-risk score is 100, and the label states "No price erosion detected." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Top Holdings

The following are the top holdings in the fund (note that this is a partial list):

• MIDEA GROUP CO LTD CLASS A: 5.30%

• JP MORGAN US GOVT CAPITAL 3164: 5.06%

• SITC INTERNATIONAL HOLDINGS CO LTD: 4.91%

• NETEASE INC ADR: 4.62%

• BEIJING HUAFENG TEST & CONTROL TECHNOLOGY CO LTD CLASS A: 4.22%

• CONTEMPORARY AMPEREX TECHNOLOGY CO LTD CLASS A: 4.19%

• NEWAY VALVE (SUZHOU) CO LTD CLASS A: 4.13%

• LUCKIN COFFEE INC ADR: 3.79%

• SICHUAN KELUN-BIOTECH BIOPHARMACEUTICAL CO LTD CLASS H SHARES: 3.65%

• ATOUR LIFESTYLE HOLDINGS LTD ADR: 3.34%

Pros

• The fund has shown positive price returns both year-to-date and over the last year.

• The erosion-risk measurements are currently rated as "good."

Cons

• Distributions are irregular and occur less frequently.

• The income rating grade is a "C."

Beginner takeaway

When looking at an ETF like MCHS, it is helpful to distinguish between the share price and the total return. While the share price tells you how much the cost of one unit has changed, the total return gives a fuller picture by including cash distributions. Always remember that high yields can sometimes be misleading, and it is important to look at the overall performance and risk scores.