Funds upbeat on Europe, Japan

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 (怡富亞洲新興市場信託基金), which gained 174.85 percent.

For European equities, the best-performing fund belonged to Invesco, which manages the GT Continental Europe A Fund (景泰歐洲公司基金A股). The fund gained 42.19 percent last year.

But while Europe and Asia performed well, US equity funds varied greatly.

The top US equity fund in 1999 was Franklin Equity A Fund (富蘭克林股票基金), with a 48.87 percent return. At the same time, the Franklin Utility/A Fund (富蘭克林公用事業基金) lost 17.29 percent during the same period.

Latin American funds did well. Invesco's GT Latin America A Fund (景泰拉丁美洲基金A股) jumped 59.88 percent.

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 (宏利國際增長基金), which garnered a return of 45.24 percent.

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."