Returns of the BlackRock Pacific Fund
From a purely NAV (net asset value) return standpoint, in the one-year period ending January 2016, MDPCX stood seventh among the nine funds chosen for this review. It was also one among four funds that failed to grow in 2015.
As a benchmark for all funds in this review, we’ll look at the metrics of the MSCI AC Asia-Pacific Index, which happens to be the specific benchmark index for MDPCX as well.
Standard deviation is used for assessing risks associated with an investment. Simply put, it measures the deviation of a series of returns from its average. A wide deviation reflects high fluctuation in returns, resulting in higher risk, and vice-versa.
For the one-year period ended January 2016, the standard deviation for MDPCX stood at 16.6%. The MSCI AC Asia-Pacific Index had a standard deviation of 16.1% over the same period while the arithmetic average of the standard deviation of all nine funds in this review came in at 15.3%. Hence, the returns of MDPCX were more volatile than both the peer group average and the index.
The Sharpe Ratio
For realized returns, the Sharpe Ratio assesses the average return of a risk-free asset or security (like US Treasuries of a certain maturity) over its total risk, as represented by standard deviation. The higher the Sharpe Ratio, the better the risk-adjusted performance.
The Sharpe Ratio for MDPCX for the one-year period ending January 2016 stood at -0.51. This risk-adjusted measure stood at -0.62 for the index, showing a marginally better risk-adjusted performance by the fund than the index.
The information ratio shows the consistency of a fund manager along with measuring his ability to generate excess returns over a benchmark. Given its benchmark, the information ratio of MDPCX was 0.52 for the one-year period ending January 2016. Although a positive information ratio is good, MDPCX’s quantum was the least positive among seven out of nine of our funds that had positive ratios.
Meanwhile, the beta of MDPCX stood at 1.01, making it more susceptible than the index to market swings and one of two funds that had a beta marginally higher than 1.
A note for investors
MDPCX invests in Mitsubishi UFJ Financial Group (MTU), Toyota Motor (TM), ORIX (IX), Hitachi (HTHIY), and Westpac Banking (WBK) and has fared poorly over the one-year period ending January 2016. Its risk-adjusted measures are not great either, as far as the aforementioned period goes. However, investors would do well to watch the longer-term performance of the fund and then decide whether to invest in MDPCX.
Let’s move now to the Parnassus Asia Fund Investor Shares (PAFSX).