Why You May Want to Consider MACSX


Mar. 8 2016, Updated 10:07 a.m. ET

Matthews Asian Growth and Income Fund performance

In this article, we’ll take a detailed look at the performance of the Matthews Asian Growth and Income Fund Investor Class (MACSX). The fund is invested in the stocks of companies such as Yum! Brands (YUM), Japan Tobacco (JAPAY), HSBC Holdings (HSBC), Telekomunikasi Indonesia (TLK), and Chunghwa Telecom Company (CHT), among others.

From a purely net asset value return standpoint, MACSX was a good performer overall both in the one-year period until February 29, 2016, and in 2015. It stood first and fifth, respectively, in its peer group for the periods mentioned above. 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

MACSX’s standard deviation, or the volatility of its returns, in the one-year period until February 29 was 12.2%. This was lower than both AAXJ’s 17.9% and the peer group’s average of 16.5%. It’s also the lowest volatility among all funds in this review.

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 it.

MACSX’s information ratio, calculated with AAXJ as the benchmark, was 1.26 for the one-year period ended February 29, ranking it fourth 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. In 2015, the fund’s information ratio placed it ninth among its peers.

A note to investors

MACSX’s alpha was above average for the one-year period ended February 29 but below average for 2015. Year-to-date, February 2016 has been excellent for MACSX, as its information ratio and alpha have both been the best among its peers.

Given the volatile times, MACSX’s strategy is well suited. Investors who are looking only for growth, though, may want to look elsewhere. For long-term investors, further evaluation for a longer period of time may be required in order for the fund to make the shortlist.

In the next article, we’ll look at the Mirae Asset Asia Fund Class A (MALAX).


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