uploads///T Rowe Price Asia Opportunities Fund Vs Peers

Decent Showing by TRAOX in the Year Leading up to February


Mar. 8 2016, Updated 8:08 a.m. ET

T. Rowe Price Asia Opportunities Fund performance

In this article, we’ll outline the performance of the T. Rowe Price Asia Opportunities Fund (TRAOX). The fund is invested in the stocks of companies such as China Life Insurance (LFC), POSCO (PKX), SK Telecom Company (SKM), Infosys (INFY), and JD.com (JD), among others.

From a purely net asset value return standpoint, TRAOX emerged as a good performer for both the one-year period until February 29, 2016, and for 2015. It stood fourth and second, respectively, in its peer group for the periods mentioned above.[1. When we refer to the peer group, we mean the group of 12 funds chosen for this review.] For return comparison, we’ve chosen two ETFs: the iShares MSCI All Country Asia ex Japan ETF (AAXJ) and the WisdomTree Asia Pacific ex-Japan ETF (AXJL).

For evaluating benchmark-related metrics, we’ve chosen AAXJ as the benchmark for all funds in this review, as it tracks the MSCI All Country Asia ex Japan Index.

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Other metrics

TRAOX’s standard deviation, or the volatility of its returns, in the one-year period until February 29 was 16.1%. This was lower than both AAXJ’s 17.9% and the peer group’s average of 16.5%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative both for the one-year period ended February 29 and for 2015. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that.

The fund’s information ratio, calculated with AAXJ as the benchmark, was 0.7 for the one-year period ended February 29, ranking it seventh among the 12 funds in this review. The information ratio shows the consistency of a fund manager along with the measure of his ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. For 2015, the fund’s information ratio placed it third among its peers.

A note to investors

TRAOX has existed for less than two years. For this reason, nothing conclusive can be said about its performance. However, it has posted decent quantitative metrics for the short period that it’s been in existence. Like its information ratio, its alpha placed it seventh for the one-year period ended February 29 and third for 2015.

A bit more of the fund needs to be seen, especially for those wishing to invest for the long term. However, it has beaten another offering by the fund house, the T. Rowe Price New Asia Fund (PRASX), across the various periods under review.

In the last article of the series, we’ll look at the overall picture that emerges from this analysis.


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