Compared with American stocks, mutual funds that invest in Asia and the Pacific Rim have slightly underperformed over the recent one-year period, but the region remains attractive, money managers and others say, because economies there have been gathering speed faster than many other regions around the globe.
The average Asia Pacific fund that holds Japanese companies returned 13.3% for the one-year period through September 30, while the Standard & Poor's 500-stock index rose 13.8%. For the three years through September, the funds gained 11%, on average, compared with the index's 4.0% rise. Looking back five years, Asian funds slipped 1.1% on average, and the index eased 1.3%.
Lorraine Tan, vice president and a director of research for Standard & Poor's Asian equity unit, says that now is a particularly good time to invest in the region because, except for Japan, its economic growth relative to the U.S. and the rest of the world is stronger. Asian holdings can diversify portfolios and provide exposure to fast-growing economies in China and India, Tan argues.
"I think we're still at a pretty early stage of a very long-term move" in the region, said Anthony Cragg, who oversees the Strong Asia Pacific Fund (SASPX). "We're seeing a major shift in economic power to the East, obviously primarily led by China."
