December 2015

The China Region Fund gained 3.23 percent in the fourth quarter of 2015, underperforming its benchmark, the Hang Seng Composite Index, which rose 5.46 percent during the same period.  See complete fund performance here.


  • The fund had particularly strong stock selection within Hong Kong, while allocations to Indonesia also aided performance within the fourth quarter.
  • The fund’s allocation to technology helped, and stock selection within the properties and construction and consumer goods sectors yielded strong contributions relative to the benchmark.
  • China Vanke, a property and development company operating throughout a number of top-tier cities in mainland China, constituted the top contributor to fund performance, rising 38.45 percent in the quarter. The fund remains overweight this stock versus the Hang Seng Composite Index.


  • Selected stocks within the Philippines, South Korea and Taiwan failed to keep pace with those that collectively make up the fund’s Hong Kong benchmark. 
  • High cash levels hurt performance more than did allocations to any specific sector.  Allocations to financials as well as stock selection within the materials and technology sectors weighed on relative performance. 
  • Together, Zhuzhou CSR Times Electric Co. and SmarTone Telecommunications Holdings share the unfortunate title of largest individual detractor from fund performance, declining 21.03 and 16.74 percent respectively in the fourth quarter. Both stocks represent overweight positions versus the benchmark.  


  • The Chinese Lunar New Year holiday begins in the second week of February, and with only a few weeks remaining before the scheduled weeklong closure of mainland Chinese stock markets, the odds of some form of government stimulus or intervention ahead of the holiday could be higher.  
  • South Korean equities should prove relatively resilient after the U.S. Federal Reserve raised interest rates, given South Korea’s robust fiscal status, recovering domestic demand, rising shareholder returns and attractive valuation. Indeed, index-dominant technology exporters in Korea are likely to benefit from potential further strength in the U.S. dollar. Based on the last five years, says Morgan Stanley, a weakening Korean won against the U.S. dollar tends to correlate with outperformance of Korean equities versus the rest of Asia, with a three-month time lag. 
  • The continued tectonic shift of China’s economy toward services and away from manufacturing could create ongoing opportunities in areas like technology and clean energy. Relevant to China’s tectonic economic shift is 2015’s historic Trans-Pacific Partnership (TPP) trade deal. Although China did not participate, the deal should nonetheless support the continued ascendency of some other Asian manufacturing centers, like Indonesia and, in particular, Vietnam, which seems to have the most to gain from the TPP.


  • Currency instability within the region presents an ongoing threat. The U.S. Federal Reserve’s December 2015 rate hike--the first step in what is expected to be a slow cycle of normalizing U.S. interest policy--does create risk for a number of emerging market currencies, and the Chinese yuan has been more volatile ever since China’s surprise devaluation back in August. In the fourth quarter, the offshore renminbi (CNH) constituted one of the weakest currencies in East and Southeast Asia, down 2 percent.
  • The Caixin China Manufacturing Purchasing Managers’ Index (PMI) remains at 48.6--in contraction territory--as of its November 2015 print, signaling continued weakness in the Chinese manufacturing sector and, after a years-long downtrend in Chinese GDP (the 3Q 2015 print was 6.9 percent year-over-year), investors will be scrutinizing and questioning any and all forthcoming Chinese data for any inkling of a so-called “hard landing.”
  • President Xi Jinping’s now-hallmark national anticorruption campaign could continue to weigh upon certain equities associated with conspicuous consumption, particularly Macao casino operators and producers of luxury goods. Combined with the recent and increasing preference of Chinese tourists to venture further abroad on holiday, these trends could spell further danger for Hong Kong and Macao in 2016.

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. The Caixin China Manufacturing Purchasing Manager's Index (PMI) is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 420 manufacturing companies.

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 12/31/2015: Zhuzhou CSR Times Electric Co. 1.30%, SmarTone Telecommunications Holdings Ltd. 2.45%, China Vanke Co. Ltd. 1.44%.

Net Asset Value
as of 02/12/2016

Global Resources Fund PSPFX $4.50 0.06 Gold and Precious Metals Fund USERX $6.25 0.13 World Precious Minerals Fund UNWPX $4.41 0.06 China Region Fund USCOX $6.29 0.01 Emerging Europe Fund EUROX $4.83 0.03 All American Equity Fund GBTFX $21.76 0.46 Holmes Macro Trends Fund MEGAX $16.05 0.16 Near-Term Tax Free Fund NEARX $2.27 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.01 No Change