Performance Breakdown of the Matthews Asia Growth Fund (MPACX)

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Returns of the Matthews Asia Growth Fund

From a purely NAV (net asset value) return standpoint, in the one-year period ending January 2016, MPACX stood in sixth place 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 MPACX as well.

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Standard deviation

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 MAPIX stood at 14.9%. The MSCI AC Asia Pacific Index had a standard deviation of 16.1% in 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 MPACX were less 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 the standard deviation. The higher the Sharpe Ratio, the better the risk-adjusted performance.

The Sharpe Ratio for the MPACX for the one-year period ending January 2016 stood at -0.44. This risk-adjusted measure stood at -0.62 for the index, showing a slightly better risk-adjusted performance by the fund than the index.

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Other metrics

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 MPACX was 0.66 for the one-year period ending January 2016. Although a positive information ratio is good, MPACX’s quantum was lower than five of its peers in this review. Meanwhile, the beta of the fund stood at 0.86, making it less volatile than the index used in this analysis.

A note for investors

MPACX invests in ORIX (IX), HDFC Bank (HDB), Nidec (NJ), Alibaba Group Holding (BABA), and Fanuc (FANUY). It did not do great in the one-year period ending January 2016 because some of the financial markets that it is invested in, like India, had a poor 2015. Although it has beaten its benchmark, MPACX’s consistency in returns has been not as strong as some of its peers. Investors would do well to look at longer time horizons to see whether MPACX suits their needs.

Now it’s time to run down the next fund on our Asia-Pacific list: the BlackRock Pacific Fund Investor A Shares (MDPCX).

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