Rising in the East
China: It's been the emerging-market fund story since the early 1990s, and prospects for investment opportunities this year are more promising than ever.
Eric Sandlund, portfolio manager of the Columbia Newport Greater China Fund (NGCAX), says that the Chinese economy grew by a whopping 9.5 percent in 2004. "When you look at the macro level, it's been 15 years where you've had compounded growth between 8 and 10 percent per year," he says, adding that China's economy is a much bigger factor in the global economy today than it was in the past century.
Recalling earlier visits to China, Sandlund says that in 1991 there was only one company foreigners could invest in. Today, there are hundreds.
The Columbia Newport Greater China Fund ranked third in performance over the past five years (ending December 2004), according to Lipper, and most of the 50 to 60 stocks in its portfolio pay dividends--which mitigates some of the risk involved. The bulk of its assets are invested in Hong Kong, Taiwan and mainland Chinese companies.
This fund is best suited for investors with long-term investment horizons, "partly because that matches up with the philosophy of how we invest," Sandlund says, "and partly because emerging markets are inherently volatile."
Dian Vujovich is an author, syndicated columnist and publisher of fund-investing site www.fundfreebies.com.