Is T. Rowe Price New Asia Fund (PRASX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Pacific Rim - Equity fund category, T. Rowe Price New Asia Fund (PRASX) could be a potential option. PRASX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
PRASX 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
PRASX finds itself in the T. Rowe Price family, based out of Baltimore, MD. T. Rowe Price New Asia Fund made its debut in September of 1990, and since then, PRASX has accumulated about $2.41 billion in assets, per the most up-to-date date available. Anh Lu is the fund's current manager and has held that role since June of 2014.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 5.92%, and it sits 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 9.88%, 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 PRASX over the past three years is 14.63% compared to the category average of 12.22%. Over the past 5 years, the standard deviation of the fund is 15.07% compared to the category average of 12.43%. This makes the fund more volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In PRASX's case, the fund lost 67.5% in the most recent bear market and underperformed comparable funds by 9%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Nevertheless, with a 5-year beta of 0.84, the fund 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. PRASX has generated a negative alpha over the past five years of -1.39, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, PRASX is a no load fund. It has an expense ratio of 0.94% compared to the category average of 1.47%. From a cost perspective, PRASX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Overall, T. Rowe Price New Asia Fund ( PRASX ) 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 the Pacific Rim - Equity area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PRASX too 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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