Coevolutionary negative frequency dependent selection has been hypothesized to maintain genetic variation in host and parasites. Despite the extensive literature pertaining to host-parasite coevolution, the effect of matching-alleles (MAM) coevolution on the maintenance of genetic variation has not been explicitly modelled in a finite population. The dynamics of the MAM in an infinite population, in fact, suggests that genetic variation in these coevolving populations behaves neutrally. We find that while this is largely true in finite populations two additional phenomena arise. The first of these effects is that of coevolutionary natural selection on stochastic perturbations in host and pathogen allele frequencies. While this may increase or decrease genetic variation, depending on the parameter conditions, the net effect is small relative to that of the second phenomena. Following fixation in the pathogen, the MAM becomes one of directional selection, which in turn rapidly erodes genetic variation in the host. Hence, rather than maintain it, we find that, on average, matching-alleles coevolution depletes genetic variation.