Did the Matthews Asia Dividend Fund Beat Its Peers in 1Q16?


Apr. 7 2016, Updated 12:29 p.m. ET

Matthews Asia Dividend Fund overview

In this article, we’ll outline the performance of the Matthews Asia Dividend Fund Investor Class (MAPIX), which is the class available for retail investors. As of February 2016, the fund was managing assets worth $4.4 billion, making it the second largest fund in this review by asset size. The latest holding report shows that the fund was invested in 66 securities including the stocks of companies like NTT DOCOMO (DCM), Chunghwa Telecom (CHT), Qualcomm (QCOM), and PT Telekomunikasi Indonesia Tbk (TLK).

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Matthews Asia Dividend Fund’s returns

From a purely net asset value return standpoint, MAPIX figured among the top three funds in its peer group both in the one-year period ending March 31, 2016, and in 1Q16. 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 fund 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 Matthews Asia Dividend Fund

For the one-year period ending in March 2016, the standard deviation for MAPIX stood at 15.4%. This was much lower than both the MSCI AC Asia Pacific Index’s standard deviation of 17.8% and the arithmetic average (16.8%) of the standard deviation of all funds in this review.

The Sharpe ratio for MAPIX for the one-year period ending in March 2016 was negative. However, for 1Q16, MAPIX was one of three funds to post a positive ratio vis-à-vis the aforementioned benchmark. Its risk-adjusted returns were the highest among the three funds.

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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, the information ratio of MAPIX placed it fourth among its peer group for the one-year period ending in March 2016.

Investor takeaway

After an average 2015, MAPIX performed a bit better in the one-year period ending March 31, 2016. The first quarter of 2016 was great for the fund because of its dividend strategy. Both its alpha and information ratios were the best among its peers for the quarter. MAPIX’s dividend strategy makes it different from other funds in this review. In volatile times, the fund has done better than its peers, making it an option for those looking for both income and growth.

The next fund in this review is a cousin of MAPIX: the Matthews Asia Growth Fund Investor Class (MPACX).


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