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Is Matthews China Investor (MCHFX) a Strong Mutual Fund Pick Right Now?

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China - Equity fund seekers may want to consider taking a look at Matthews China Investor (MCHFX - Free Report) . MCHFX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

We note that MCHFX 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 MCHFX.

History of Fund/Manager

Matthews Asia is based in San Francisco, CA, and is the manager of MCHFX. The Matthews China Investor made its debut in February of 1998 and MCHFX has managed to accumulate roughly $265.52 million in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of -3.46%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -18.77%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. Over the past three years, MCHFX's standard deviation comes in at 32.03%, compared to the category average of 20.92%. The fund's standard deviation over the past 5 years is 28.11% compared to the category average of 20.36%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. MCHFX has a 5-year beta of 0.38, which means it is likely to be less 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. The fund has produced a negative alpha over the past 5 years of -6.83, which shows 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, MCHFX is a no load fund. It has an expense ratio of 1.15% compared to the category average of 1.17%. So, MCHFX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $2,500 and that each subsequent investment needs to be at $100

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Matthews China Investor ( MCHFX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on the China - Equity area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into MCHFX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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