The Invesco Pacific Growth Fund Sees Turbulence in 2016

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Invesco Pacific Growth Fund overview

In this article, we’ll assess the performance of the Invesco Pacific Growth Fund Class A (TGRAX), which is one of the classes available for retail investors. As of February 2016, the fund was managing assets worth ~$77 million and was invested in 53 securities including the stocks of companies like Taiwan Semiconductor Manufacturing (TSM), Tencent Holdings (TCEHY), Mitsubishi UFJ Financial Group (MTU), CNOOC (CEO), and China Mobile Limited (CHL).

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Invesco Pacific Growth Fund’s returns

From a purely net asset value return standpoint, TGRAX fell the least among its peer group during the one-year period ending March 31, 2016. When we refer to the peer group, we mean the group of nine funds chosen for this review.

As a benchmark for all funds in this review, we’ll look at the metrics of the MSCI AC Asia Pacific Index. Although not all funds use this index as their benchmark, we’ll use this index across this series for parity. For comparison, we’ll use two combinations of ETFs that provide exposure to stocks from the region. The first group consists of the Vanguard FTSE Pacific ETF (VPL) and the Vanguard FTSE Emerging Markets ETF (VWO), and the second group consists of the iShares Core MSCI Pacific ETF (IPAC) and the iShares MSCI Emerging Markets ETF (EEM).

Quantitative metrics of the Invesco Pacific Growth Fund

For the one-year period ending in March 2016, the standard deviation for TGRAX stood at 16.8%. This was lower than the MSCI AC Asia Pacific Index’s standard deviation of 17.8% and equaled the arithmetic average of the standard deviation of all funds in this review.

The Sharpe ratio for TGRAX was negative both in the one-year period ending in March 2016 and in 1Q16.

The information ratio shows the consistency of fund managers and measures their ability to generate excess returns over a benchmark. Considering the MSCI AC Asia Pacific Index as the benchmark, TGRAX’s information ratio was the third best among its peers for the one-year period ending March 31, 2016.

Investor takeaway

TGRAX’s quantitative metrics were great for 2015 and the one-year period ending March 31, 2016. However, the same cannot be said about 1Q16. Its alpha and information ratios placed it sixth among its peers in 1Q16.

It is important to note that investment decisions should not be made on short-term metrics. However, these metrics can give you a heads-up that you need to check the fund’s performance over longer periods and across business cycles to determine whether the poor short-term performance was just a one-off or the fund simply performs poorly in volatile markets. This information can be crucial for you to rebalance your mutual fund investments.

The next fund in this review is the Vanguard Pacific Stock Index Fund Investor Shares (VPACX).

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