Asia-Pacific Could Be on Your Investment Radar: Here's How
Returns of the Matthews Asia Dividend Fund
From a purely NAV (net asset value) return standpoint, in the one-year period ending January 2016, the Matthews Asia Dividend Fund (MAPIX) came in third among the nine funds chosen for this review. As a benchmark for all the funds in this series, we’ll use the MSCI AC Asia-Pacific Index, which happens to be the benchmark index for MAPIX as well.
Standard deviation is a metric used for assessing the risks associated with an investment. Simply put, it measures the deviation of a series of returns from its average. A wide deviation reflects high fluctuation in returns, resulting in higher risk, and vice-versa.
For the one-year period ending January 2016, the standard deviation for MAPIX stood at 14.3%. The MSCI AC Asia-Pacific Index had a standard deviation of 16.1% in the same period, while the arithmetic average of the standard deviation of all funds in this review came in at 15.3%. Hence, the returns of MAPIX were less volatile than both the average of its peer group and the index.
The Sharpe Ratio
For realized returns, the Sharpe Ratio assesses the average return of a risk-free asset or security (like US Treasuries of a certain maturity) over its total risk, as represented by its standard deviation. The higher the Sharpe Ratio, the better the risk-adjusted performance.
The Sharpe Ratio for MAPIX for the one-year period ending January 2016 stood at -0.23. This risk-adjusted measure stood at -0.62 for the index, showing a better risk-adjusted performance by the fund than the index.
The information ratio shows the consistency of a fund manager along with measuring his ability to generate excess returns over a benchmark. Given its benchmark, the information ratio of MAPIX was 1.16 for the one-year period ending January 2016, placing it fourth among all funds in this review. Meanwhile, the beta of the fund stood at 0.82, making it the second least sensitive to market movement.
A note for investors
MAPIX is invested in NTT Docomo (DCM), Chunghwa Telecom Company (CHT), Qualcomm (QCOM), and PT Telekomunikasi Indonesia (TLK) and is different from our other eight other funds in this series, given its dividend-focused strategy. Depending on your desire of payout, this fund could make your shortlist because its metrics look good, even though it’s underperformed some of its growth-focused peers. Its asset allocation, due to its strategy, is also quite different, but a low beta makes it less prone to a downside in falling markets.
MAPIX has a growth-focused cousin as well: the Matthews Asia Growth Fund Investor Class (MPACX). We’ll check out MPACX in the next part.
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