Matthews Asia Portfolio Manager Andrew Mattock indicates that investors who wish to increase their exposure to artificial intelligence should turn their attention to China.

He said that investors need to adopt more targeted approaches, as a broad strategy for emerging markets will not be as effective.

"Investors need to realize that when they buy funds in emerging markets, or ordinary MSCI products... what they get in return is not much," Mattock said this week on the "ETF Edge" program on CNBC. "The most important part that they are missing... is that of China."

He pointed out that companies from South Korea and Taiwan account for nearly half of the weight in the iShares MSCI emerging markets ETF ( EEM ), while iShares MSCI China ETF ( MCHI ) do not focus on AI stocks.

The fund managed by Mattock is Matthews China Fund ( MCHFX ). According to the company's website, this fund invests at least 80% of its net assets in common stocks and preferred stocks of companies established in China.

As of the close on Friday, this fund has declined by 4% so far this year. Its largest positions include Tencent and Alibaba.

Reviewing the view of Tepper to buy "everything in China"

There seems to be a clear change in investing in China.

Billionaire hedge fund manager, founder of Appaloosa Management, David Tepper, is once again optimistic about the world's second-largest economy – in September 2024, he told CNBC that he had increased his positions in “everything related to China.”

However, Brendan Ahern of KraneShares suggests that investors consider some strategies to help themselves withstand the significant fluctuations in the Chinese market.

"I like to use options around these ETF, such as KWEB [ KraneShares CSI China Internet ETF ]," the company's chief investment officer stated in the same interview.

“Why do some hedge funds prefer these ETF? Because they can sell call options and, in principle, protect themselves,” he added, “leaving themselves some downside protection.”

According to the data from FactSet, the top two positions held by KraneShares CSI China Internet ETF are the same as those of Matthews China Fund: Tencent and Alibaba. However, as of the close on Friday, this fund has declined by more than 27% so far this year.