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Asia Development Bank Expects The Region To Remain Strong: 3 Fund Picks

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A report released by the Asian Development Bank (ADB) stated that growth in Asia is expected to remain steady despite an escalating global trade war. This is primarily attributed to the judicious policymaking practices followed in some of the large Asian economies.

Such policies not only ensure sustainable growth within the economy but also safeguard it from any global shock. Under circumstances where the Asian economy is likely to remain strong, investing in mutual funds from the region seems prudent.

Asia's Growth To Remain Steady

The ADB projected that Asia's economy is set to grow 6 percent in 2018 and 5.9 percent in 2019. This is largely in line with its previous forecast in April. Further, if Asia's newly industrialized economies are excluded, the growth forecast stands at 6.5 percent for 2018 and 6.4 percent for 2019.

ADB Chief Economist, Yasuyuki Sawada believes that judicious macroeconomic and monetary policies would not only result in robust economic growth in the region but also cushion the economy from "external shocks." This is evident from the fact that China, the world's second-largest economy, is poised to grow 6.6% and 6.4% in 2018 and 2019, respectively. The projection stems from the fact that the Chinese government has consistently made efforts toward rebalancing the growth by shifting focus toward increasing domestic consumption.

Further, East Asia would witness 6 percent growth in 2018 and 5.8 percent in 2019, on the back of steadily growing economies of Hong Kong, China and Taipei. On the other hand, growth in South Asia would be the fastest in the region.

The region's growth would be led by India, which is on track to meet its fiscal year 2018 projection of 7.3 percent growth. This would further accelerate to 7.6 percent in 2019 buoyed by reformations in taxes as well as the country's banking sector. Finally, growth in Southeast Asia would remain unchanged at 5.2 percent in 2018 and 2019.

3 Mutual Funds To Consider

Zacks highlighted four mutual funds that are poised to gain from these factors. These funds have encouraging three and one-year returns abd minimum initial investments within $5000. Zacks expect these funds to outperform their peers in the future.

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.

T. Rowe Price New Asia (PRASX) invests a bulk of its assets in common stocks of Asian companies ex Japanese companies. PRASX seeks appreciation of capital for the long run. The fund is non-diversified in nature. This Pacific Rim-Equity product has a history of positive total returns for over 10 years. Specifically, the fund has returned 7.9 percent over the three-year and 8.1 percent over the five-year benchmarks. PRASXhas an annual expense ratio of 0.93 percent.

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 a history of positive total returns for over 10 years. Specifically, the fund has returned 11.5 percent over the three-year and 9.5 percent over the five-year benchmarks.

MPACX has an annual expense ratio of 1.12 percent.

Fidelity China Region (FHKCX) invests the majority of its assets in securities of Hong Kong, Taiwan and China issuers and other investments that are tied economically to the China region. It invests primarily in common stocks. The fund's returns over the three and five-year benchmarks are 4.6 percent and 11.4 percent, respectively. FHKCX has an annual expense ratio of 0.99 percent.

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Financial Advisors Mutual Funds News Specialty ETFs Emerging Market ETFs Futures Global Markets


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