Use the player below to listen to a podcast of the commentary, or use the link to subscribe to the RSS feed.

June 2015

The China Region Fund gained 7.97 percent in the second quarter, outperforming its benchmark, the Hang Seng Composite Index, which rose 7.05 percent. See complete fund performance here.


  • Investments in Hong Kong and China contributed most positively to fund performance, as bullish investor sentiment percolated from the A-Share market in mainland China to the H-Share market in Hong Kong thanks to easier monetary policy and accelerating capital market reform.
  • Exposure to financials proved most successful in generating excess return for the fund. China- and Hong Kong-based brokers and asset managers benefited most from liquidity inflows from mainland Chinese mutual funds to Hong Kong via the exchange connect program since April.  
  • Guotai Junan International Holdings Ltd, the Hong Kong subsidiary of a leading Chinese securities broker, was the top contributor to the fund with a 121.5-percent gain during the quarter.


  • Exposure to Philippines detracted most from fund performance, as regional and global liquidity rotated from over-owned Southeast Asia to under-owned Taiwan, Korea and China.  
  • Chinese auto manufacturers were among the worst contributors to fund performance, owing to deteriorating sales and a brewing price war in China’s passenger car market since April.
  • Great Wall Motor Company, a Chinese auto manufacturer focusing on SUVs, was the worst contributor with a 29.29 percent decline for the quarter.  


  • Value as an investment style delivered the best performance in Asia during the second quarter, a strong comeback after a mediocre showing in 2014. As regional market volatility rises thanks to wild sentiment shifts caused by rapid deleveraging in the China A-Share market and fierce government intervention, value should continue to outperform growth stocks as risk appetite retreats and defensive positioning prevails. 
  • A sharp correction of both China A-Shares and H-Shares of late, followed by drastic, heavy-handed government intervention using administrative orders to restrict buying and selling behavior as well as allowing 40 percent of A-Share companies to suspend trading, only increased market uncertainty by delaying the cleansing process. Cash as an asset class may outperform in the near term.   
  • Taiwanese equities remain an attractive alternative to participate in a potential Chinese growth recovery later this year, especially against near-term volatility in Chinese markets. Meaningful revenue exposure to China, significant benefits from lower oil prices, relatively low sensitivity to U.S. interest rates, historically inexpensive valuation, steady earnings growth, and relative under-ownership by foreign investors are among the favorable drivers for Taiwanese outperformance going forward.  


  • Suspension of IPOs in the Chinese A-Share market and a violent correction in its small- and micro-cap indices of late challenge the core rationale for privatizing U.S.-traded Chinese companies back home, because the sustainability of valuation premium in the A-Share market has become highly uncertain. This can weigh on investor sentiment towards Chinese American depository receipts (ADRs) in the near term.     
  • Federal Reserve Chair Janet Yellen has maintained recently that it would be appropriate to start normalizing U.S. monetary policy by raising interest rates later this year. This might weigh on Southeast Asian currencies, especially the Indonesian rupiah and Malaysian ringgit.
  • Decelerating auto sales in China year-to-date and newly lowered full-year auto sales growth forecast by China Association of Automobiles from 7 percent to 3 percent help explain several rounds of price cuts by foreign and local auto manufacturers and could continue to pressure equities on the auto supply chain.

Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. For a portion of periods, the fund had expense limitations, without which returns would have been lower. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees of 0.05%) which, if applicable, would lower your total returns. Performance quoted for periods of one year or less is cumulative and not annualized. Obtain performance data current to the most recent month-end here or by calling 1-800-US-FUNDS.

The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the China Region Fund as a percentage of net assets as of 06/30/2014: Guotai Junan International Holdings Ltd. 2.12%, Great Wall Motor Co. Ltd. 0.90%.

Net Asset Value
as of 08/04/2015

Global Resources Fund PSPFX $5.15 0.07 Gold and Precious Metals Fund USERX $4.74 0.02 World Precious Minerals Fund UNWPX $3.96 0.01 China Region Fund USCOX $7.96 0.04 Emerging Europe Fund EUROX $5.77 -0.02 All American Equity Fund GBTFX $27.88 -0.03 Holmes Macro Trends Fund MEGAX $21.17 -0.02 Near-Term Tax Free Fund NEARX $2.24 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 -0.01