Is Matthews China Small Companies Investor (MCSMX) a good mutual fund choice right now?

IIf you are looking for mutual fund stock report funds, a place to start might be Matthews China Small Companies Investor (MCSMX). MCSMX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine predictor factors such as size, cost and past performance.

Fund/manager history

Matthews Asia is based in San Francisco, CA and is the director of MCSMX. Matthews China Small Companies Investor debuted in May 2011, and since then MCSMX has accumulated approximately $218.40 million in assets, according to the most recent date available. The fund is currently managed by Winnie Chwang who has been in charge of the fund since August 2020.

Performance

Of course, investors are looking for strong performance in funds. This fund in particular delivered a 5-year annualized total return of 13.03% and is in the top third of its peers in the category. If you’re interested in shorter timeframes, don’t discount the fund’s 3-year annualized total return of 16.62%, which puts it in the top third over that time frame.

When looking at a fund’s performance, it’s also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 18.11%, the standard deviation of the MCSMX over the past three years is 22.37%. Looking at the past 5 years, the standard deviation of the fund 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 as a whole. Since alpha represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, it is also worth paying attention to this measure. The 5-year performance of MCSMX produced a positive alpha of 6.29, which means that the managers of this portfolio are adept at picking stocks that generate higher returns than the benchmark.

Expenses

As competition intensifies in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low cost product will perform better, all other things being equal. Thus, it is essential for investors to take a closer look at the cost parameters. 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.

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

Conclusion

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

Don’t stop here for your fund research on the Mutual Fund Stock Report. We also have a lot more on our site to help you find the best possible fund for your portfolio. Be sure to check www.zacks.com/funds/mutual-funds for more insights into the world of funds, and feel free to compare MCSMX to its peers as well for additional insights. If you also want to check out our stock reports, be sure to go to Zacks.com to see all the great tools we have to offer, including our proven Zacks Ranking.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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