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During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
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Get Four
|  | NOVEMBER 17, 2004
 FUND Q&A A Fund Hitching Its Wagon to China [Page 2 of 2] Q: How has your allocation changed over the past year? A: Recently, we moved out of Japan. We had about a 32% exposure in the spring. Having been close to a 10% weighting in Australia, we're now at about 4.5% there, largely because of commodity resource cycles. We've been adding to Hong Kong/China plays. Many of the places we're investing -- Thailand, Taiwan, Korea, Singapore -- we're looking through them to China. Q: Is Singapore heavily overweighted? Are you moving there because other markets have become weaker? A: Yes. Singapore tends to be slightly countercyclical with the rest of Asia. When other markets go a bit sour, Singapore and Australia come into their own. They're more defensive, transparent, and stable. The governments are very efficient. Q: Are you concerned that a slowdown in China will negatively impact its neighbors? A: Not at all. China was growing at 9% to 10%. It overheated, and slowed down to 7% or 8%. Now the so-called slower growth is actually extremely strong. China will eventually end up as the second-most important economy on earth. Q: Let's talk about the Wells Fargo (WFC ) acquisition, which has come about due to the New York Attorney General's indicting of five Strong funds for market timing. How will your fund be affected by the change of ownership? A: I'll continue to run the fund from Colorado, just outside Denver. [The Asia Pacific fund wasn't implicated in the investigation.] The fund will change its name to the Wells Fargo Asia Pacific Fund and add one analyst based in San Francisco. I'll also have use of a nighttime trader, which would give us 24-hour trading. Wells Fargo has a bigger infrastructure, bigger client base, and this will be the only Asian fund in that portfolio. The Wells Fargo deal has also laid to rest any concern that anybody might have about the investigation. It's a very high-rated bank with an extremely good reputation. Even Morningstar, who were very anti-Strong fund family on that basis, have now taken us off their health warning. Q: What impact have the investigations had on your fund in terms of redemptions or inflows, and in terms of management style or practices? A: Absolutely zero in terms of management style and practices. We run the fund exactly the same. There were redemptions out of the whole Strong family when the news first broke, but I would say that since then, the asset base has been very stable. Q: What type of investor is your fund suitable for? A: It's suitable as one's main Asian exposure, though the level of exposure is up to the individual. From my partisan viewpoint, I would say that American investors are hugely underweight in Asia. I look at my own country -- England -- at the beginning of the 20th century. While the fortunes of Britain declined, one of its saving graces was its involvement in this dynamic emerging market called America. I'm not saying that America is declining, but China will emerge whether we like it or not. And the smart thing to do is to get on board.
 All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc. Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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