What Has Held the Columbia Pacific/Asia Fund Back in 2016?



Performance evaluation of the Columbia Pacific/Asia Fund

The Columbia Pacific/Asia Fund – Class A (CASAX) has had a below average 2016 until June 24 compared to its eight peers that we have chosen for this review. The fund has fallen 1% in the year so far. Apart from the YTD (year-to-date) period, the fund has been a below average performer for all periods shown in the graph. We have graphed its performance against two combinations of ETFs: the Vanguard FTSE Pacific ETF (VPL) with the Vanguard FTSE Emerging Markets ETF (VWO) and the iShares Core MSCI Pacific ETF (IPAC) with the iShares MSCI Emerging Markets ETF (EEM). In this article, we’ll look at what has contributed to this below average performance by the fund in 2016 YTD.

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Portfolio composition and contribution to returns

The consumer discretionary sector forms only 12% of the CASAX. However, so far in 2016, it has contributed the most to the fund’s decline. Mazda Motor (MZDAF), Toyota Motor (TM), and Fuji Heavy Industries (FUJHY) are primarily responsible for driving the sector down. Though there are positive contributors like Indonesia’s Matahari Department Store and China’s New Oriental Education & Technology Group (EDU), their contributions haven’t been enough to reduce the sizable negative contribution from other stocks.

Financials have closely tailed discretionary stocks in terms of negative contributions to the fund’s returns. Mitsubishi UFJ Financial Group (MTU) has towered above all other stocks in terms of negative contributions from the sector.

The information technology sector has been the best-performing sector for the fund. Taiwan Semiconductor Manufacturing (TSM) and Tencent Holdings Limited (TCEHY) have been the star performers from the sector so far in 2016. Meanwhile, Japan’s PeptiDream and M3 have helped health care stocks contribute positively in 2016 so far, but Hoya and China Biologic (CBPO) have dragged down the sector.

Investor takeaways

The CASAX has a very high portfolio turnover. A high turnover isn’t a bad thing if fund management can deliver returns with that strategy. However, that doesn’t seem to be the case for the CASAX.

In the one-year period until June 17, the fund has done better than both combinations of passive funds. However, there are quite a few active funds that have done even better than the CASAX in that period. Investors would need to look for other options apart from this fund to invest in Asia-Pacific.

Let’s now move on to the Fidelity Pacific Basin Fund (FPBFX).


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