Mutual Fund Reviews: T. Rowe Price New Asia Fund

The T. Rowe Price New Asia Fund (PRASX) was initiated on September 28, 1990, and is one of numerous international mutual funds managed by T. Rowe Price. T. Rowe Price (TROW) is a publicly owned and traded investment management firm that has been in business for over 80 years, has offices worldwide, and has a market capitalization/worth of over $10 billion dollars. According to the T. Rowe Price mutual fund prospectus, the New Asia Fund invests in small and large growth orientated companies throughout emerging markets within Asia, thus naturally excludes Japan.

Mutual fund performance

The New Asia Fund is ranked by Morningstar's star rating system with 2 stars for its 3 and 10 year return performance and 3 stars for its 5 year progress meaning it ranked between the 10-67.5th percentile of all mutual funds reviewed by Morningstar. Despite this relatively low ranking by Morningstar, the T. Rowe Price New Asia Fund has performed relatively well in terms of long term average annual returns yielding 6.01% if held since its first issue. Moreover, the New Asia Fund has returned higher 3, 5 and 10 year yields than the T. Rowe price International Growth and Income fund, the T. Rowe Price Global Stock Fund and the T. Rowe Price International Equity Index Fund.

The costs of owning shares in the T. Rowe Price New Asia Fund include an expense ratio of just under 1% with no load fees unless the fund is sold within 90 days of purchase for which a 2% redemption charge is incurred. The minimum investment amount for this fund is $2,500.00 for new accounts or $100.00 for existing accounts.

The risk of owning the New Asia Fund is higher than bond and blue chips funds, is ranked at the high end of the risk spectrum by T. Rowe Price, but has correlated quite closely with the Lipper Pacific (excluding Japan) funds average; moreover as of the date of this article, 28.7% of the funds asset value was distributed among 10 companies. The fund is heavily weighted in India and China among 5 core industry sectors. The funds management is somewhat limited in comparison to some other funds, however its longevity provides some testimony to its ability to perform.


Competitive positioning

Outside of T. Rowe Price mutual funds specializing in Asian growth companies provide competition for the New Asia Fund. Some of these funds have averaged higher returns than the New Asia Fund, whereas others have yielded lower average returns for multiple year categories. A few of T. Rowe Price's competitor funds are the Fidelity China Region Fund (FHKCX), the Goldman Sachs Asia Equity Fund (GSAGX), Dreyfus Emerging Asia Fund (DEAAX), and the AIM Asia Pacific Growth Fund (ASIAX). These funds have various investment objectives and sizes and average annual 5 year returns ranging from 0-10.95% (googlefinance.com). They are also managed by well established financial competitors in the financial services industry.

Summary

The advantages of owning the T. Rowe Price New Asia Fund is the potential for high return, no load fees, and stable management as indicated by parent company management, time since fund inception and long- term performance. The disadvantages of this fund are there are better performing Asian emerging market mutual funds to choose from as indicated by this article and the Morningstar mutual fund star rating system.

If an investor is diversifying mutual fund ownership through a T. Rowe Price account, the New Asia Fund provides a higher risk option through ownership of a handful of pre-selected companies within Asian emerging markets. Several competing funds to the T. Rowe Price New Asia fund exist with differing risk, investment mix, size and returns making the choice and necessity for research before purchasing such a fund beneficial to a more complete understanding of the costs, benefits and disadvantages of emerging market mutual funds specializing in Asian asset management.

Sources:

1. T. Rowe Price International Funds Equity Portfolios 2009 Prospectus
2. http://www3.troweprice.com/fb2/fbkweb/snapshot.do?ticker=PRASX
3. http://google.com/finance