Replies to post #20085 on Value Microcaps Motherboard

[lentinman]

Bbtoc: CHINA: MCHFX:

One easy way to play China is the MCHFX. It is a Matthews China fund. I owned it during the great rise in 2003-04 and sold when the trend line broke. It retraced quite a bit and is only now back to near the peaks. Unquestionably, I would put money back into it if I were a mutual fund guy, but that was the last mutual fund I ever owned and I will never own another. Their performance has always greatly exceeded the average.

There was another quirk about this fund that gave you an advantage. Because of the time difference it gave an investment window for a person who owned the fund to sell on bad news (or potentially buy on good news) based on a price that was already predetermined at the end of the day. In fact, you could already know that price (or very close) because you could know the stocks they owned and track them yourself. I used to be within a 1/4% regularly.


Here is how it works. If, for example, a nuclear bomb went off in some Asian city at say, 2PM EST, you could call your broker and sell your MCHFX before the close of business and get the close of business price. And since the fund owned stocks that were traded only in Asia - not the US - and since those stock markets were closed overnight (there), then the closing price of MCHFX would be based (as it always is) on the overnight stock prices in Asia. Thus, in theory, there were some number of hours in our trading day whereby if you knew something horrible happened there (or potentially anywhere), you could sell MCHFX and not be affected by it. I always considered that one small insurance against calamity that you do not have if you own stocks that are traded in the US.

This would be true of each of the Matthews Asian funds - unquestionably the best family IMO.

Len