Returns of the Columbia Pacific/Asia Fund (CASAX)
From a purely NAV (net asset value) return standpoint, CASAX was an average performer among the nine funds that we’ll be looking at in this series. This average performance refers to both calendar 2015 and the one-year period ending January 2016.
But let’s dig a bit deeper. As a benchmark for all the funds in this series, we’ll look at the metrics of the MSCI AC Asia-Pacific Index. Although all funds do not have this index as their official benchmark, we’ll use it throughout this series for parity.
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 ending January 2016, the standard deviation for CASAX stood at 15.9%. By comparison, the MSCI AC Asia-Pacific Index had a standard deviation of 16.1% over the same period. Meanwhile, the arithmetic average of the standard deviation of all funds in this review was 15.3%. Hence, the returns of CASAX were more volatile than the average in its peer group but less volatile than the index itself.
The Sharpe Ratio
For realized returns, the Sharpe Ratio assesses the average return over a risk-free asset or security (like US Treasuries of a certain maturity) over total risk, as represented by its standard deviation. The higher the Sharpe Ratio, the better the risk-adjusted performance.
The Sharpe Ratio for CASAX for the one-year period ending January 2016 stood at -0.31. This same risk-adjusted measure stood at -0.62 for the index.
The information ratio shows the consistency of a fund manager along with measuring his or her ability to generate excess returns over a benchmark.
With the MSCI AC Asia-Pacific Index as its benchmark, the information ratio of CASAX was 1.48 for the one-year period ending January 2016. Meanwhile, the beta of the fund stood at 0.96, making it a little less volatile than the index used in this analysis.
A note for investors
CASAX is invested in Sony (SNE), ORIX (IX), Westpac Banking (WBK), and Rio Tinto (RIO), among others, and has emerged as an average performer over the past one-year. However, its information ratio indicates the ability of the fund manager to generate consistent returns. This is always good as it shows superior stock-picking ability. So the numbers show that the fund might be a strong pick for your short list, if you’re considering investing in the region.
Let’s move to our second Asia-Pacific fund: the Fidelity Pacific Basin Fund (FPBFX).