Low Volatility Makes ASIAX Stand Out


Mar. 7 2016, Published 4:55 p.m. ET

Invesco Asia Pacific Growth Fund performance

In this article, we’ll specifically outline the performance of the Invesco Asia Pacific Growth Fund Class A (ASIAX), which is one of the classes available for retail investors. The fund is invested in companies such as Broadcom (AVGO), Taiwan Semiconductor Manufacturing (TSM), China Mobile (CHL), NetEase (NTES), and class B shares of Telekomunikasi Indonesia (TLK).

From a purely net asset value return standpoint, ASIAX was one of the better performers in the one-year period until February 29, 2016, after having had a poor 2015. It stood and third and eighth, respectively, in the peer group for the aforementioned periods.[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

ASIAX’s standard deviation, or its volatility of returns, in the one-year period until February 29 was 14.6%. This was sharply 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 for both the one-year period ended February 29 and for 2015. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that.

The information ratio, calculated with AAXJ as the benchmark, was 1.05 for the one-year period ended February 29, ranking it sixth among the 12 funds in this review. The information ratio shows the consistency of a fund manager and measures 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 eighth among its peers.

A note to investors

Similar to the information ratio, ASIAX’s alpha ranked it sixth and eighth for the one-year period ended February 29 and 2015 respectively. Year-to-date in 2016, the fund has been among the better performers both in terms of consistency of returns and alpha generated.

The standout feature of ASIAX is its low volatility of returns. For investors who believe in the long-term potential of the fund and its investment philosophy, its low standard deviation is an added advantage.

In the next article, we’ll look at the Columbia Asia Pacific ex-Japan Fund Class A (CAJAX).


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