Is Fidelity China Region Fund (FHKCX) a Strong Mutual Fund Pick Right Now?

On the lookout for a China - Equity fund? Starting with Fidelity China Region Fund (FHKCX) is one possibility. FHKCX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify FHKCX in the China - Equity category, an area that is rife with potential choices. China - Equity mutual funds almost exclusively target stocks throughout China, Taiwan, and Hong Kong. China has changed drastically over the years, and even though we still associate the country's economy with export-focused manufacturing, it now focuses more than ever on its middle class. If you like the sounds of this investment method, then FHKCX could be worth a closer look for your portfolio.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FHKCX. The Fidelity China Region Fund made its debut in November of 1995 and FHKCX has managed to accumulate roughly $1.99 billion in assets, as of the most recently available information. The fund is currently managed by Ivan Xie who has been in charge of the fund since April of 2018.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 9.39%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 27.86%, which places it in the top third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. Compared to the category average of 21.77%, the standard deviation of FHKCX over the past three years is 19.54%. Over the past 5 years, the standard deviation of the fund is 25.09% compared to the category average of 25.98%. This makes the fund less 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. FHKCX has a 5-year beta of 0.66, 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. The fund has produced a positive alpha over the past 5 years of 1.81, which shows 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, FHKCX is a no load fund. It has an expense ratio of 0.90% compared to the category average of 1.31%. So, FHKCX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

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

For additional information on the China - 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 FHKCX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.

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This article originally published on Zacks Investment Research (zacks.com).

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