Asian stocks are back in the spotlight after major economies like China witnessed its fastest economic growth in seven years, while Japan registered two straight years of economic expansion. The sentiment surrounding Japan’s economic performance for this year also remains upbeat after manufacturer confidence reached an 11-year high and exports rose for 13 consecutive months.
Moreover, both the World Bank and IMF expected India’s economy to grow higher in the coming years. Additionally, tensions in the Korean peninsula seem to have subdued as South Korea together with its northern counterpart will march at the opening ceremony of the Winter Olympics.
Key indexes of the aforesaid countries have clearly gained momentum in the last one-year period following economic expansion. Strong performance of indexes in the Asia Pacific region bode well for mutual funds with significant exposure to the Asian markets. This is why it makes good sense to invest in Asia Pacific mutual funds.
China and Japan Hold Spotlight
For the first time in seven years, China’s economic growth has moved north rather than south. The world’s second-largest economy expanded 6.9% year over year to around $12.84 trillion, registering the fastest growth in seven years, according to the National Bureau of Statistics (NBS). Robust exports and an uptick in consumer spending were cited to be the reasons for this rapid expansion. (
In Japan, exports advanced 9.3% in December after registering an increase of 16.2% in November, per the country’s Ministry of Finance. Exports rose for 13 straight months for the first time. Additionally, its manufacturers’ confidence climbed from 27 in December to 35 in January, reaching its best level in 11 years, per a Reuters Tankan poll. Strong rise in exports and robust manufacturer sentiment raised optimism for steady economic growth in the near future.
Inter-Korea Tension Subdues, India Maintains Growth
Both North and South Korea recently had diplomatic talks in the demilitarized zone, where it was decided that athletes from both sides of Korea will march together at the opening ceremony of the Winter Olympics held at Pyeongchang, South Korea. The march will happen under the Korean Unification Flag for the first time since the 2006 Winter Games hosted by Italy. Subdued tensions in Korean Peninsula perked up market sentiment.
Coming to India, the government expects its economy to increase by 6.5% for the financial year 2017-18, lower than previous year’s 7.1%. However, both the World Bank and IMF have a rosy view on the Indian economy, as both expect the country’s economy to grow 6.7% in the current financial year. Additionally, the World Bank expects the economy to increase by 7.3% for the next fiscal year 2018-19, while IMF projected the economy to grow by 7.4% during the same period.
In the last one year, Japan’s benchmark index Nikkei 225 climbed 23.7%. Additionally, the broader Topix 100 index advanced 20.4% during the same period. Additionally, South Korea’s Kospi Composite index jumped 24.1%. Moreover, China’s Shanghai Composite index rose 13.6%, while India’s broad-based index, Sensex, jumped 33.4%.
Buy These 5 Asia Pacific Mutual Funds
Investors interested in gaining exposure to the well-diversified and economically vibrant Asia-Pacific region may consider mutual funds that primarily allocate most of their assets in countries within this region.Moreover, strong gains in the key indexes of some major nations put the spotlight on Asia Pacific mutual funds.
This upbeat backdrop calls for investing in five Asia Pacific mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have impressive one-year annualized and three-year annualized returns. These also have minimum initial investment within $5000 and low expense ratios.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
Matthews Asia Growth Investor MPACX seeks to achieve its investment objective by investing the majority of its assets in preferred and common stocks of companies located in Asia. It may also invest in convertible securities of Asian companies. MPACX seeks capital growth for the long run.
MPACX has an annual expense ratio of 1.14%, lower than the category average of 1.44%. The fund has one-year and three-year annualized returns of 45.5% and 14.2%, respectively. MPACX has a Zacks Mutual Fund Rank #1.
Fidelity Emerging Asia FSEAX seeks growth of capital. FSEAX invests a huge portion of its assets in securities of companies that are involved in the Asian emerging markets like India. The fund analyses each of the companies’ industry position and financial condition, as well as the economic and market conditions before making investments.
FSEAX has an annual expense ratio of 1.08%, lower than the category average of 1.44%. The fund has one-year and three-year annualized returns of 48.8% and 13.4%, respectively. FSEAX has a Zacks Mutual Fund Rank #1.
T. Rowe Price New Asia ( PRASX Quick Quote PRASX - Free Report) invests a bulk of its assets in common stocks of Asian companies, but does not include Japanese companies. PRASX seeks appreciation of capital for the long run. The fund is non-diversified in nature.
PRASX has an annual expense ratio of 0.93%, lower than the category average of 1.44%. The fund has one-year and three-year annualized returns of 42.5% and 11.8%, respectively. PRASX has a Zacks Mutual Fund Rank #2.
Fidelity Japan Smaller Companies FJSCX seeks capital growth for the long run. It invests mainly in those small-cap companies that are economically based in Japan. These small-cap companies have market-cap similar to those included in the JASDAQ Index or the Russell/Nomura Mid-Small Cap Index. FJSCX may also invest in large-cap companies.
FJSCX has an annual expense ratio of 0.94%, lower than the category average of 1.33%. The fund has one-year and three-year annualized returns of 39% and 20.6%, respectively. FJSCX has a Zacks Mutual Fund Rank #1.
Matthews Korea Investor MAKOX invests a large chunk of its assets in common and preferred stocks of South Korean companies. MAKOX focuses on mid-to-large-cap firms, but is not restricted to them. The fund seeks capital appreciation for the long run. It is a non-diversified fund.
MAKOX has an annual expense ratio of 1.15%, lower than the category average of 1.92%. The fund has one-year and three-year annualized returns of 40% and 15.5%, respectively, and a Zacks Mutual Fund Rank #1.
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