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Is Matthews India Fund (MINDX) a Strong Mutual Fund Pick Right Now?

Any investors hoping to find a Pacific Rim - Equity fund might consider looking past Matthews India Fund (MINDX). MINDX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

MINDX is one of many Pacific Rim - Equity funds to choose from. Pacific Rim - Equity mutual funds typically invest in companies throughout the dominant export-focused markets of Hong Kong, Singapore, Taiwan, and Korea. Since Japan mutual funds are already popular in their own right, these Pacific funds will usually invest less than 10% of their assets in Japanese companies.

History of Fund/Manager

Matthews Asia is based in San Francisco, CA, and is the manager of MINDX. Matthews India Fund made its debut in October of 2005, and since then, MINDX has accumulated about $626.75 million in assets, per the most up-to-date date available. Sharat Shroff is the fund's current manager and has held that role since June of 2006.

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Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. MINDX has a 5-year annualized total return of 7.58% 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 1.5%, 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 MINDX over the past three years is 26.07% compared to the category average of 20.09%. The fund's standard deviation over the past 5 years is 21.34% compared to the category average of 16.84%. 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. MINDX has a 5-year beta of 0.78, which means it is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. With a negative alpha of -3.86, 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, MINDX is a no load fund. It has an expense ratio of 1.15% compared to the category average of 1.40%. Looking at the fund from a cost perspective, MINDX is actually cheaper 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 India Fund ( MINDX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Matthews India Fund ( MINDX ) looks like a somewhat weak choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Pacific Rim - Equity, make sure to go to www.zacks.com/funds/mutual-funds 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.


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