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Quantitative Metrics Signal PRASX as a Below-Average Fund

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T. Rowe Price New Asia Fund performance

In this article, we’ll specifically outline the performance of the T. Rowe Price New Asia Fund (PRASX). The fund is invested in the stocks of companies such as Autohome (ATHM), Dr. Reddy’s Laboratories (RDY), KT (KT), POSCO (PKX), and Vipshop Holdings (VIPS).

From a purely net asset value return standpoint, PRASX was a below-average performer for both the one-year period until February 29, 2016, and for 2015. It stood seventh in its peer group for both the above-mentioned periods.[1. When we refer to the peer group, we mean the group of 12 funds chosen for this review.] For return comparison, we have chosen 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

PRASX’s standard deviation, or the volatility of its returns, in the one-year period until February 29 was 16.9%. This was lower than AAXJ’s 17.9% but a bit higher than 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 doing so.

The fund’s information ratio, calculated with AAXJ as the benchmark, was 0.4 for the one-year period ended February 29, ranking it eighth 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 seventh among its peers.

A note to investors

PRASX’s alpha was disappointing both for the one-year period ended February 29 and for 2015. It ranked eighth and seventh, respectively, for the periods. This trend has continued in 2016. The fund’s quantitative metrics have been below average across the short window of time that we’ve analyzed. Given PRASX’s company, investors may want to look at other funds in this review if they wish to invest in the region.

In the next article, we’ll look at the T. Rowe Price Asia Opportunities Fund (TRAOX).

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