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Is Fidelity China Region Fund (FHKCX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research

China - Equity fund seekers should consider taking a look at Fidelity China Region Fund (FHKCX). FHKCX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that FHKCX is a China - Equity option, an area loaded with different options. China - Equity mutual funds and their investments revolve around stocks in China, Taiwan, and Hong Kong. China's middle class is booming, and its economy reflect this demographic's rise more than the vast export-focused manufacturing one we typically associate with the country. Even if this strategy sounds enticing, you may want to look past FHKCX.

History of Fund/Manager

FHKCX finds itself in the Fidelity family, based out of Boston, MA. The Fidelity China Region Fund made its debut in November of 1995 and FHKCX has managed to accumulate roughly $1.14 billion in assets, as of the most recently available information. Stephen Lieu is the fund's current manager and has held that role since April of 2018.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 6.42%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 13.12%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 19.62%, the standard deviation of FHKCX over the past three years is 18.05%. Looking at the past 5 years, the fund's standard deviation is 21.26% compared to the category average of 21.94%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In FHKCX's case, the fund lost 57.13% in the most recent bear market and outperformed its peer group by 4%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Nevertheless, with a 5-year beta of 1.18, the fund is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. FHKCX has generated a negative alpha over the past five years of -4.76, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FHKCX is a no load fund. It has an expense ratio of 0.97% compared to the category average of 1.49%. So, FHKCX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

Overall, Fidelity China Region Fund ( FHKCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Fidelity China Region Fund ( FHKCX ) looks like a good potential choice for investors right now.

This could just be the start of your research on FHKCXin the China - Equity category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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