TDF vs. MCSMX

Last updated Jun 4, 2026

TDF (Templeton Dragon Fund Inc.) and MCSMX (Matthews China Small Companies Fund) are both China Equities funds. Over the past 10 years, TDF returned 5.09%/yr vs 13.83%/yr for MCSMX. A 0.66 correlation means they provide meaningful diversification when combined.

Performance

TDF vs. MCSMX - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Templeton Dragon Fund Inc. (TDF) and Matthews China Small Companies Fund (MCSMX). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, TDF achieves a 0.50% return, which is significantly lower than MCSMX's 42.66% return. Over the past 10 years, TDF has underperformed MCSMX with an annualized return of 5.09%, while MCSMX has yielded a comparatively higher 13.83% annualized return.

TDF

• 1D: -2.01%
• 1M: -0.09%
• YTD: 0.50%
• 6M: 1.49%
• 1Y: 19.80%
• 3Y*: 8.21%
• 5Y*: -8.66%
• 10Y*: 5.09%

MCSMX

• 1D: 1.94%
• 1M: 10.79%
• YTD: 42.66%
• 6M: 44.25%
• 1Y: 73.85%
• 3Y*: 21.20%
• 5Y*: 1.54%
• 10Y*: 13.83%

*Multi-year figures are annualized to reflect compound growth (CAGR)

TDF vs. MCSMX - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
TDF Templeton Dragon Fund Inc.	0.50%	37.70%	5.44%	-20.06%	-32.93%	-18.02%	52.98%	27.97%	-11.80%	42.09%
MCSMX Matthews China Small Companies Fund	42.66%	28.85%	2.82%	-17.50%	-31.25%	6.71%	82.73%	35.41%	-17.65%	53.71%

Correlation

The correlation between TDF and MCSMX is 0.54, which is moderate. They share some common price drivers but move independently often enough to provide real diversification benefit when combined.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.54
Correlation (3Y) Calculated over the trailing 3-year period	0.70
Correlation (5Y) Calculated over the trailing 5-year period	0.73
Correlation (10Y) Calculated over the trailing 10-year period	0.69
Correlation (All Time) Calculated using the full available price history since Jun 3, 2011	0.66

The correlation between TDF and MCSMX shifts across timeframes, from 0.54 (1 year) to 0.73 (5 years), reflecting how their relationship changes across market environments.

Return for Risk

TDF vs. MCSMX — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

TDF

TDF Risk / Return Rank: 15
TDF Sharpe Ratio Rank: 15
TDF Sortino Ratio Rank: 16
TDF Omega Ratio Rank: 15
TDF Calmar Ratio Rank: 16
TDF Martin Ratio Rank: 14

MCSMX

MCSMX Risk / Return Rank: 92
MCSMX Sharpe Ratio Rank: 96
MCSMX Sortino Ratio Rank: 92
MCSMX Omega Ratio Rank: 87
MCSMX Calmar Ratio Rank: 96
MCSMX Martin Ratio Rank: 91

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

TDF vs. MCSMX - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Templeton Dragon Fund Inc. (TDF) and Matthews China Small Companies Fund (MCSMX). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

	TDF	MCSMX	Difference
Sharpe ratio: Return per unit of total volatility	1.08	3.55	-2.47
Sortino ratio: Return per unit of downside risk	1.65	4.53	-2.88
Omega ratio: Gain probability vs. loss probability	1.20	1.60	-0.40
Calmar ratio: Return relative to maximum drawdown	1.43	6.34	-4.92
Martin ratio: Return relative to average drawdown	3.99	18.74	-14.75
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

TDF vs. MCSMX - Sharpe Ratio Comparison

The current TDF Sharpe Ratio is 1.08, which is lower than the MCSMX Sharpe Ratio of 3.55. The chart below compares the historical Sharpe Ratios of TDF and MCSMX, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	TDF	MCSMX	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	1.08	3.55	-2.47
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	-0.32	0.06	-0.38
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	0.21	0.62	-0.41
Sharpe Ratio (All Time) Calculated using the full available price history	0.29	0.42	-0.13

Drawdowns

TDF vs. MCSMX - Drawdown Comparison

The maximum TDF drawdown since its inception was -68.15%, which is greater than MCSMX's maximum drawdown of -55.77%. Use the drawdown chart below to compare losses from any high point for TDF and MCSMX.

Drawdown Indicators

	TDF	MCSMX	Difference
Max Drawdown Largest peak-to-trough decline	-68.15%	-55.77%	-12.38%
Max Drawdown (1Y) Largest decline over 1 year	-13.95%	-12.32%	-1.63%
Max Drawdown (3Y) Largest decline over 3 years	-28.25%	-26.50%	-1.75%
Max Drawdown (5Y) Largest decline over 5 years	-61.85%	-53.98%	-7.87%
Max Drawdown (10Y) Largest decline over 10 years	-66.87%	-55.77%	-11.10%
Current Drawdown Current decline from peak	-45.44%	-3.21%	-42.23%
Average Drawdown Average peak-to-trough decline	-22.57%	-20.21%	-2.36%
Ulcer Index Depth and duration of drawdowns from previous peaks	4.97%	4.11%	+0.86%

Volatility

TDF vs. MCSMX - Volatility Comparison

The current volatility for Templeton Dragon Fund Inc. (TDF) is 6.56%, while Matthews China Small Companies Fund (MCSMX) has a volatility of 9.07%. This indicates that TDF experiences smaller price fluctuations and is considered to be less risky than MCSMX based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	TDF	MCSMX	Difference
Volatility (1M) Calculated over the trailing 1-month period	6.56%	9.07%	-2.51%
Volatility (6M) Calculated over the trailing 6-month period	12.67%	17.91%	-5.24%
Volatility (1Y) Calculated over the trailing 1-year period	18.42%	22.02%	-3.60%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	27.19%	24.45%	+2.74%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	23.95%	22.32%	+1.63%

Dividends

TDF vs. MCSMX - Dividend Comparison

TDF's dividend yield for the trailing twelve months is around 3.57%, more than MCSMX's 1.56% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
MCSMX Matthews China Small Companies Fund	1.56%	2.23%	1.35%	2.36%	1.78%	26.38%	16.98%	1.03%	2.25%	5.66%	4.79%	8.88%
TDF Templeton Dragon Fund Inc.	3.57%	3.55%	1.36%	0.00%	12.73%	14.13%	24.72%	10.75%	12.43%	7.95%	10.34%	22.49%

Frequently Asked Questions

Can I hold both TDF and MCSMX in my portfolio?

TDF and MCSMX have a correlation of 0.54, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, TDF or MCSMX?

MCSMX has higher volatility (9.07%) compared to TDF (6.56%). In terms of maximum drawdown, TDF dropped -68.15% vs MCSMX's -55.77%.

Which has better risk-adjusted returns?

MCSMX currently has the higher Sharpe Ratio (3.55 vs 1.08), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.