Looking over Asia from a Colorado Peak
David R. Francis, writer of The Christian Science Monitor, The Christian Science Monitor
From his hillside home and office in Evergreen, Colo., money manager Anthony Cragg looks upon 14,500-foot Mt. Evans.
"I have a wonderful view," says Mr. Cragg, speaking from his home, 8,700 feet above sea level.
Cragg must figuratively see much further - as far as Asia. He's the stock picker for Strong Asia Pacific Fund, a fund whose shares have nearly doubled in value since September. Investors, looking at reports by such mutual-fund analysts as Morningstar and Lipper, have noticed the outstanding performance of Cragg's fund and other funds invested in Asia. They are putting money into Asia again. Strong Asia Pacific has assets of $82 million now, up from $17 million last autumn. Asia funds are enjoying a ride back from the stock-market dive in Japan, Thailand, Indonesia, Singapore, Malaysia, and Hong Kong and other Asian countries in 1997 and 1998. "They were tough years," Cragg says. His fund's shares plummeted 31 percent in 1997 and 3.1 percent in 1998. Ready for turnaround By the first half of 1998, Cragg had 35 percent of his fund's assets in cash - an unusually high cash level for a mutual fund. "It was a time to keep your head down and try to preserve capital," he says. But last summer Cragg figured many Asian stocks were priced at "unsustainable low levels - almost bankruptcy levels." So in August and September, he put his cash back into stocks and was fully invested by October. "It paid off," he says. His fund's shares were worth $4.50 last September. They are about $8.60 today. Cragg argues that the jump in Asian stocks in the past six months is only "the first leg of a very important move." He expects further gains when more investors, including global and international mutual funds, reallocate a bigger proportion of their portfolios into Asia - bailing out of a slumping Europe. Now, Cragg says, Japan is "just beginning to get its economic act together." And other Asian nations, South Korea, Thailand, etc., are rebounding. These smaller economies are like sports cars - quick to turn around, says Cragg. So he has his portfolio overweighted in these nations - 13 percent, for instance, in Singapore. William Rocco, a Morningstar analyst, is more cautious about Asia funds. He describes an investment in them as "aggressive," that is, rather risky. Stocks cost more than they did last August. That gain may be hard to replicate, he says. Much depends on whether Japan takes more steps to restructure its corporations and revive its economy. Mr. Rocco suggests most investors may be better off putting a portion of their portfolio in an international fund, which likely will have a portion of its money invested in Asia. This avoids the "timing" problem of when it is best to invest in Asia. …