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

This story originally appeared on Zacks

Having trouble finding a Mutual Fund Equity Report fund? Matthews China Fund (MCHFX) is a potential starting point. MCHFX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

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History of Fund/Manager

Matthews Asia is based in San Francisco, CA, and is the manager of MCHFX. The Matthews China Fund made its debut in February of 1998 and MCHFX has managed to accumulate roughly $999.98 million in assets, as of the most recently available information. The fund’s lead manager is Andrew Mattock and Winnie Chwang is the co-manager.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 16.16%, and is 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 19.09%, 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. The standard deviation of MCHFX over the past three years is 20.38% compared to the category average of 17.09%. The fund’s standard deviation over the past 5 years is 20.55% compared to the category average of 15.68%. 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 0.72, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. MCHFX has generated a positive alpha over the past five years of 3.83, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, MCHFX is a no load fund. It has an expense ratio of 1.04% compared to the category average of 1.50%. MCHFX is actually cheaper than its peers when you consider factors like cost.

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

For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Equity Report, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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