uploads///USAA International Fund Vs Peers

How Are the USAA International Fund’s Metrics?


Mar. 11 2016, Updated 8:07 a.m. ET

USAA International Fund’s performance

In this article, we’ll specifically outline the performance of the USAA International Fund (USIFX), which is one of the classes available for retail investors. The fund is invested in stocks of companies like Bayer AG (BAYZF), Taiwan Semiconductor Manufacturing Company Limited (TSM), Nestlé (NSRGY), Danone (DANOY), and Canadian National Railway Company (CNI), among others.

From a purely NAV (net asset value) return standpoint, the USIFX did not have a notable showing in either the one-year period until February 29, 2016, or in 2015 compared to the peers chosen for this series. For return comparison, we have chosen two ETFs: the iShares MSCI ACWI ex U.S. ETF (ACWX) and the Vanguard FTSE All-World ex-US ETF (VEU). For evaluating benchmark-related metrics, we’ve chosen ACWX as the benchmark for all funds in this review, as it tracks the MSCI All Country World ex-U.S. Index.

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Other metrics

The USIFX’s standard deviation, or the volatility of returns, in the one-year period until February 29 was 15.2%. This is lower than both the ACWX’s 15.4% and the peer group’s average of 15.7%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative for the one-year period ended February 29. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that. The ratio stood at 0.18 for 2015, placing it eighth among its peers.

The information ratio, calculated with ACWX as the benchmark, was 0.99 for the one-year period ended February 29, placing it seventh among its peers. The information ratio shows the consistency of fund managers along with their 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 fourth among its peers.

A note to investors

The USIFX’s alpha was unspectacular for the one-year period until February 29, 2016. However, in 2015, the fund had a good information ratio, which shows a good consistency of returns. Its alpha generation placed it only eighth among the 12 funds in this review. The fund’s volatility of returns is on the lower side, which is a positive. However, its performance metrics are unspectacular. Investors should compare this offering to peers in this review as well as other funds in order to assess whether this fund suits their needs.


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