Is Matthews China Small Companies Investor (MCSMX) a Strong Mutual Fund Pick Right Now?

view original post

If you have been looking for Mutual Fund Equity Report funds, a place to start could be Matthews China Small Companies Investor (MCSMX). MCSMX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Matthews Asia is based in San Francisco, CA, and is the manager of MCSMX. Matthews China Small Companies Investor made its debut in May of 2011, and since then, MCSMX has accumulated about $218.40 million in assets, per the most up-to-date date available. The fund is currently managed by Winnie Chwang who has been in charge of the fund since August of 2020.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 13.03%, and is in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 16.62%, 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 18.11%, the standard deviation of MCSMX over the past three years is 22.37%. Looking at the past 5 years, the fund’s standard deviation is 21.9% compared to the category average of 16.59%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.58, which means it is hypothetically less volatile than the market at large. 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. MCSMX’s 5-year performance has produced a positive alpha of 6.29, which means managers in this portfolio are skilled in picking 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, MCSMX is a no load fund. It has an expense ratio of 1.43% compared to the category average of 1.29%. Looking at the fund from a cost perspective, MCSMX is actually more expensive than its peers.

While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.

Bottom Line

Overall, Matthews China Small Companies Investor ( MCSMX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and higher fees, Matthews China Small Companies Investor ( MCSMX ) looks like a good potential choice for investors right now.

Don’t stop here for your research on Mutual Fund Equity Report funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare MCSMX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.