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Friday January 15, 2010
Matthews Asia (MAPIX): Mark Salzinger's top fund for 2010
In his The ETF Investor's Report, he choses iShares MSCI Germany (NYSE: EWG) adding, "We think Germany’s major export-oriented stocks are poised to perform well again in 2010." "iShares MSCI Germany has bounced back in 2009 from an especially rotten 2008. In 2009, iShares Germany gained 18.1% for the year through mid-December—after bounding up 78% from the March market lows. "We think Germany’s major export-oriented stocks are poised to perform well again in 2010, despite concerns about domestic spending. "Besides, none of EWG’s top 10 holdings (excluding utilities) generate more than 47% of their revenues in Germany. These companies are global leaders in their respective industries and should benefit from renewed worldwide economic growth. 
"Many of these companies, like top holdings Siemens, Daimler and SAP, are especially attractive since their major products are in significant demand in rapidly growing emerging-markets countries—and none of them earn more than 20% of their revenue from Germany. "Despite strong performance in 2009, EWG still has an attractive valuation. Its average price/book value (P/B) is about 1.9. This is considerably lower than that of iShares S&P Europe 350 (3.0 P/B) and iShares MSCI EAFE (2.7). "EWG’s portfolio holds about 50 stocks. Six sectors account for no more than 19% and no less than 11% of the portfolio (EWG does not have any energy exposure). "Financials lead the way with about 19%, but the ETF also includes significant exposure to attractively valued industrials, consumer-discretionary and healthcare sectors." "Meanwhile, at Matthews Asia, managers Jesper Madsen and Andrew Foster seek to fill this fund with dividend-paying stocks of companies. "They select stocks throughout the Asia-Pacific region, including Japan, China/Hong Kong, Taiwan and recently at least eight other Asian countries. "Though dividends did not protect investors in American stocks from the carnage in 2008, they appear to have reduced losses for investors in Asian equities. "Matthews Asia Dividend (formerly known as Matthews Asia Pacific Equity Income) fell only 26% in 2008, vs. 42.2% on average for the funds in Morningstar’s Diversified Pacific Stock category. So far in 2009 (through Dec. 14), Matthews Asia Dividend has gained a whopping 48.1%, vs. 31.1% for its peers. "That means the fund did about 16 percentage points better than average in a down year, and has done about 17 percentage points better in the bull market so far in 2009! "The Matthews funds specialize in attempting to form portfolios of 'indexes of the future' in Asian markets. In other words, they seek exposure to publicly traded companies in sufficient quantities to represent a picture of Asian economies as they are likely to develop over time, not as some index developer imagined them to be several years ago. "So, compared to existing indexes of Asian stock markets, the Matthews funds tend to devote more of their assets to consumer stocks and midsize and small-cap companies, and less to big exporters and other famous companies." 
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