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Play 4 Asian Funds on North Korea's Denuclearization

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The resolve to improve mutual relationship between North Korea and its southern counterpart took a step further on Sep 19. Leaders from North and South Korea finally agreed on denuclearizing North Korea in an accord.

Further, the Asia Development Bank remains upbeat about the outlook for Asia’s economy through 2019. Additionally, the Bank of Japan (BoJ) decided to keep interest rates unchanged and offered a rosy view of its economy. Such encouraging conditions call for investing in mutual funds having significant exposure to Asia.

North Korea to Permanently Denuclearize

South Korea’s president Moon Jae-in and North Korea’s Kim Jong-un had created history at the third inter-Korean summit. This marks the first time since the armistice of 1953 that a North Korean leader has stepped on South Korea’s soil. The summit concluded with each leader promising to denuclearize the Korean peninsula and ending the Korean war.

On Sep 19, after a meeting in Pyongyang, leaders from the respective countries "agreed on a way to achieve denuclearization.” North Korea’s Kim Jong-un agreed to shut down one of the country’s important missile testing and launch sites. Kim also stated that this agreement was a “leap forward” toward achieving geopolitical stability in the Korean peninsula and the surrounding areas.

What Does the Deal Look Like?

South Korea’s Moon Jae-in stated that his counterpart from the North had "agreed to permanently close the Tongchang-ri missile engine test site and missile launch facility." He also stated that, to keep the procedure transparent, North Korea would move ahead with the plan in presence of experts from “relevant nations.”

The leader also stated that Kim Jong-un had agreed to close its Yongbyon nuclear facility. The facility is touted to have been used by North Korea to produce materials used in the nuclear tests. Further, defense chiefs from both countries signed a 17-page agreement, pledging to "cease all hostile acts against each other."

The two parties also agreed to file a joint bid to host 2032 Summer Olympics and establish roads between North and South Koreas in a year’s time. Moreover, they vowed to stop military drills against each other along the Military Demarcation Line by Nov 1 and remove 11 guard posts in the demilitarized zone by this year’s end.

4 Best Funds to Buy Now

Given such circumstances, we have highlighted four mutual funds from Asia carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.

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.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

T. Rowe Price Japan (PRJPX - Free Report) seeks capital appreciation for the long run by investing the majority of its assets in securities of companies based in Japan. PRJPX invests in various Japanese companies and industries, irrespective of their size.

This Sector - Japan - Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

PRJPX has a Zacks Mutual Fund Rank#1 and an annual expense ratio of 0.97%, which is below the category average of 1.27%. The fund has three and five-year returns of 16.3% and 12.5%, respectively.

Fidelity Japan (FJPNX - Free Report) seeks long-term capital growth. The fund invests a large portion of its assets in securities of companies in Japan. FJPNX invests in common stocks of companies that are influenced by the economic conditions of Japan.

This Sector - Japan – Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FJPNX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.82%, which is below the category average of 1.27%. The fund has three and five-year returns of 10.9% and 8%, respectively.

Matthews China Dividend Investor (MCDFX - Free Report) seeks returns through income growth. MCDFX invests the majority of its assets in dividend-paying securities of those companies that are based in China. The fund not only invests in equity securities but also convertible debt instruments.

This Sector - China-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

MCDFXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.19%, which is below the category average of 1.66%. The fund has three and five-year returns of 15.9% and 11.3%, respectively.

Matthews Asia Growth Investor (MPACX - Free Report) 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.

This Sector - Pacific Rim-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

MPACXhas a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.12%, which is below the category average of 1.21%. The fund has three and five-year returns of 14% and 10%, respectively.

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