While last year was a marvelous one for almost every major equity market around the world, this year also seems to be promising.
Among developed markets, Europe and Japan are the better choices this year for investors, and many emerging markets -- especially in Asia -- are good choices as well, analysts said.
According to S&P Micropal, the best-performing fund sector last year concentrated on Japanese equities. JF Japan (怡富日本信託基金) topped the list with a 395.19 percent return.
Meanwhile, most other equity fund sectors also performed strongly in 1999. But while many investors are optimistic about the future, high-rising equity funds also carry risks, analysts said.
Another fund sector that rose strongly last year were those investing in the Asia-Pacific region (excluding Japan), which was struck heavily during the financial crisis in 1998.
The best-performing fund in the sector was JF Asian Emerging Markets Trust (
For European equities, the best-performing fund belonged to Invesco, which manages the GT Continental Europe A Fund (
But while Europe and Asia performed well, US equity funds varied greatly.
The top US equity fund in 1999 was Franklin Equity A Fund (
Latin American funds did well. Invesco's GT Latin America A Fund (
For more conservative investors there were global equity funds, which also performed impressively.
The best-performing fund in this sector was ACMGI International Privatization Portfolio A Fund (大聯國際民營化基金 A 股), with a 50.38 percent return for the year. The fund invests in privatized state-owned companies all over the world.
Another global equity fund that did well was Manulife GF International Growth Fund (
The portfolio of this fund may offer some clues about the ideal asset allocation of a good global equity fund manager.
According to Manulife Funds Direct, the highest weighting in its global equity fund was North America at 33 percent of total assets, followed by the European continent (21 percent), Japan (20 percent), UK (13 percent) and the Asia-Pacific region (8 percent). The remainder was kept as cash.
But while North America has attracted investors' attention the world over, fund managers say Europe and Japan promise to be the top hot spots this year.
"The strongest gains in 2000 are likely to be seen in Europe and Japan," said Henry Chen (鄭百亨), managing director of Manulife Funds Direct Taiwan (宏利免佣基金).
"The strengthening of the global economy -- combined with low inflation and evidence of spreading supply-side flexibility -- should provide a favorable background for equity investment, although rising interest rates will contain global liquidity. Equities are likely to outperform bonds in most areas."
Other fund managers share Chen's views.
"We believe that Europe is likely to see stronger economic growth through the course of the year, partly driven by the weakness of the euro during 1999," said Francine Wu (巫慧燕), vice president of Schroder Investment Management Taiwan (寶源投資管理).
"We are slightly more positive now on Europe than on the US and, in particular, we are positive on smaller companies, which enjoy faster growth."
Wu said that in Japan, corporate restructuring could have a major impact on some of the structural issues that have harmed the market over the past decade.
"Careful stock selection is important, but some blue chip names show excellent value and growth prospects," she said. "The fragile economy makes smaller companies more risky, but overall we remain positive on the Japanese restructuring play."
Emerging markets is another sector that most money managers are upbeat about.
"Emerging markets, including Asia, Latin America and Eastern Europe, will see their equity markets more active this year," said Linda Lue (
Lue also noted that original equipment manufacturing is on the rise. As developed countries seek out cheaper sources of labor and resources, developing nations will benefit through faster growth. Cited as an example was DRAM production in Taiwan and South Korea.
"Based on our research, for conservative investors, Baring recommends 40 percent in global emerging equity markets and 30 percent for Asian [except Japan] and European equity markets, respectively," Lue said.
"For more aggressive investors, Baring recommends 30 percent in global emerging markets, 25 percent each for Asia [except Japan] and Europe, and 20 percent for Japan."
As to which fund is the best one, it goes without saying that a one-year track performance is definitely not the best measure. Normally, at least three years' of performance should be used as a gauge.
Investment advisors say one should always choose a fund with the longest track record, although past performance is not an indicator of future results.
For foreign residents, Jardine Fleming suggests four offshore Taiwan equity funds -- the Schroder Taiwan Fund, New Taipei Fund, Formosa Growth Fund and Taiwan Opportunities Fund.
According to Jardine Fleming, these funds have an excellent track record in performing in bull and bear markets.
However, these funds have not be authorized by the local regulatory agency and were not ranked by S&P Micropal.
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