South Korea’s top-performing mutual fund more than doubled its assets in 2013 by betting on global consumer shares, luring inflows from domestic investors who have sold Kospi (KOSPI) index stocks for five straight years.
The $610 million Mirae Asset Global Great Consumer Securities Master Investment Trust 1 (1A38171) returned 33 percent this year for the biggest gain among Korea-domiciled equity funds with at least $500 million of assets. The fund has grown from about $283 million at the start of the year, even as individual investors withdrew a net $4 billion from Kospi shares. The benchmark index has climbed 1 percent this year, trailing the 18 percent gain in the MSCI All-Country World Index.
South Korean investors view global consumer brands as safer bets than domestic shares as the U.S. economy strengthens, according to James Dominick, co-manager of the Mirae Asset global consumer fund. The fund has been increasing stakes in MasterCard Inc. (MA:US), Cie Financiere Richemont SA (CFR) and Tencent Holdings Ltd. (700), Dominick said in an interview.
“South Korean retail investors have been moving to global equity markets,” Dominick said in Seoul yesterday. “That’s the first step you take from a risk-appetite standpoint.”
The Mirae Asset consumer fund’s gain this year is more than 10 times bigger than the average increase of 3.2 percent in the South Korea-domiciled funds tracked by Bloomberg. The MSCI All-Country World Consumer Staples Index has increased 16 percent in 2013.
The Kospi gauge gained 0.3 percent to 2,022.64 at the close in Seoul, rising for a third day. The MSCI Asia Pacific Index was little changed.
MasterCard, the second-biggest U.S. payments network, has jumped 54 percent while Richemont, the owner of the Cartier brand, has advanced 29 percent. Tencent, Asia’s biggest Internet company, rallied 76 percent. The fund’s holdings also include Starbucks Corp. (SBUX:US), Anheuser-Busch InBev NV (BUD:US) and Google Inc., Dominick said.
Economic data last week showed job openings in the U.S. climbed to a five-year high in September, indicating employers were confident about demand, while jobless claims fell.
The Mirae Asset fund may increase holdings in emerging markets after the shares retreated amid concern the U.S. Federal Reserve will reduce monetary stimulus. Eighty percent of investors in a Bloomberg survey predict the Fed will delay a decision to begin reducing bond buying until March 2014 or later, with 5 percent forecasting a move next month, according to the latest Bloomberg Global Poll.
The MSCI Emerging Markets Consumer Staples Index has dropped 9.5 percent from this year’s high in May.
“We don’t think the impact will be as severe,” Dominick said. “We’re turning more positive.”
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