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

This story originally appeared on Zacks

Mutual fund stock report fund seekers should consider taking a look at 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.

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Fund/manager history

Matthews Asia is based in San Francisco, CA and is the director of MCSMX. Since Matthews China Small Companies Investor debuted in May 2011, MCSMX has accumulated over $347.76 million in assets. The fund is currently managed by Winnie Chwang and Andrew Mattock.

Performance

Investors are naturally looking for high performance funds. This fund in particular has delivered a 5-year annualized total return of 25% 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 34.26%, 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. Over the past three years, the standard deviation of the MCSMX is 19.05%, compared to a category average of 18.33%. The standard deviation of the fund over the past 5 years is 19.65% compared to the category average of 15.69%. This makes the fund more volatile than its peers over the past half-decade.

Risk factors

With a 5-year beta of 0.53, the fund should be less volatile than the market average. 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 fund has produced a positive alpha of 15.41 over the past 5 years, which shows that the managers of this portfolio are adept at selecting stocks that generate returns above those of the benchmark.

Expenses

For investors, it is essential to take a closer look at cost-related metrics, as costs are increasingly important for mutual fund investments. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, MCSMX is a no-load fund. It has an expense ratio of 1.41% compared to the category average of 1.40%. Thus, MCSMX is actually more expensive than its peers from a cost perspective.

This fund requires a minimum initial investment of $2,500, and each subsequent investment must be at least $100.

Conclusion

Overall, Matthews China Small Companies Investor (MCSMX) has a high ranking in the Zacks Mutual Fund, and in conjunction with its relatively strong performance, medium downside risk, and higher fees, this fund appears to be a good potential choice for investors right now.

Want even more information about MCSMX? Then head over to Zacks.com and check out our mutual fund comparison tool and all the other great features we have to help you with your mutual fund analysis for more information. If you’re more of an equity investor, be sure to also check out our Zacks Rankings and comprehensive suite of tools we make available to both novice and professional investors.

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