Per the latest report from the Asian Development Bank in its Asian Development Outlook 2019, released in April, developing and emerging economies in Asia are set to grow steadily in 2019. Developing Asia comprises 45 countries, which range from China to Tuvalu, and is expected to grow by as much as 5.7% in 2019.
Moreover, such optimism around developing Asia’s resilience was affirmed by Takehiko Nakao, president of the Asian Development Bank. Nakao stated that despite the global economic slowdown, Asia’s emerging economies will grow steadily. He also stated that the momentum of growth in the region stems from high levels of consumption as well as investment.
As a matter of fact, the report showed that investment levels in countries like Indonesia and China have surged in the past year. This has more than made up for a decline in private investments in Malaysia, Singapore and South Korea.
Such encouraging factors call for betting on mutual funds investing substantially in the emerging economies of Asia.
South Asia to Lead the Growth in Asia
Growth in South Asia is expected to nudge higher to 6.8% in 2019 from 6.7% in the previous year. Furthermore, economic growth in the region is expected to hit 6.9% in 2020. Meanwhile, sub-regional growth averages show that India is expected to boost economic growth in southern Asia.
Weakness in agriculture, coupled with low government spending and high global oil prices may have led to a contraction in the Indian economy in 2018. But the country is likely to experience slightly higher growth in 2020. India’s economy is expected to grow to the tune of 7.3% next year on the back of a recovery in agriculture and stronger domestic demand as well as reforms, which should strengthen banks and financial corporations.
Further, implementation of a value-added tax is likely to boost the fortunes of Indian companies. Economic growth in other countries from South Asia such as Bangladesh will improve to the tune of 8% in the near term.
3 Best Choices
Given such circumstances, we have highlighted three Asia mutual funds that are poised to gain from such factors. These funds also carry a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and five-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). Fidelity Emerging Asia Fund 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 economic and market conditions before making investments.
This Sector – Pacific Rim-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 15.4% and 9.2%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds,
please click here.
FSEAXhas an annual expense ratio of 1.02%, which is below the category average of 1.37%.
Matthews Asian Growth and Income Fund Investor Class Fund ( MACSX Quick Quote MACSX - Free Report) seeks long-term appreciation of capital as well as current income. The fund invests the lion’s share of its net assets in dividend-yielding common stocks, preferred stocks as well as convertible securities of companies from developed as well as emerging economies of Asia.
This Sector – Pacific Rim-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 5.7% and 2.7%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds,
please click here.
MACSXhas an annual expense ratio of 1.08%, which is below the category average of 1.37%.
Ivy Emerging Markets Equity Fund Class A Fund IPOAX aims for capital growth. The fund invests four-fifths of its assets in common stocks of companies from emerging economies or are impacted by economic conditions of the developing countries.
This Sector – Pacific Rim-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 12% and 6.2%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds,
please click here.
IPOAXhas an annual expense ratio of 1.34%, which is below the category average of 1.35%.
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