Performance evaluation of the BlackRock Pacific Fund
The BlackRock Pacific Fund – Investor A Shares (MDPCX) has had an excellent one month until June 24. However, for all other periods, except the three-month period, the fund is dead last among its eight peers chosen for this review. 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).
Let’s look at what has contributed to this poor performance by the fund in 2016 YTD (year-to-date).
Portfolio composition and contribution to returns
Financials have contributed the lion’s share of the fund’s poor showing in 2016 YTD. Mitsubishi UFJ Financial Group (MTU) leads the decliners, which also include HSBC Holdings (HSBC), ORIX (IX), and Sumitomo Mitsui Financial Group (SMFG), among many others.
Though industrials are a very distant second to financials, they’ve played an important role nonetheless. Japan’s NGK Insulators has been the biggest negative contributor among industrials. Meanwhile, Toyota Motor Corporation (TM) and JD.com (JD) have dragged the consumer discretionary sector into negative territory. Though there have been quite a few positive contributors, their combined amount hasn’t been enough to overcome the negative contributions. Health care stocks also contributed negatively, but positive contributions from stocks like Astellas Pharma (ALPMY) have reduced some of that.
The tech sector was led by Silicon Motion Technology (SIMO) and Tencent Holdings (TCEHY). However, Hitachi (HTHIY) was a sizable drag on the sector. The energy sector also contributed positively, but contributions from stocks like PetroChina (PTR) were erased to a large degree by detractors like JX Holdings and others.
There’s not much positive to say about the MDPCX for now. The portfolio has undergone a sea of change, which has pushed up its turnover ratio. However, its high exposure to financials earlier in the year continues to weigh on its performance. It’s yet to be seen whether the portfolio changes put the fund in a better position in the future. But for now, there’s really no reason to consider this fund.
Now let’s move on to the Invesco Pacific Growth Fund – Class A (TGRAX).