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4 Mutual Funds to Benefit From a Resilient Asia

Per the latest report by the new Asian Development Bank (ADB) on Jul 18, developing Asia will maintain steady growth in 2019 and 2020. The report states that robust domestic demand will offset the dampening effects of worldwide trade tensions.

The ADB maintained its growth forecasts for developing Asia at 5.7% in 2019 and 5.6% in 2020, unchanged from its last forecast in April. However, for the overall region, excluding the newly industrialized economies of Asia which include Hong Kong, the Republic of Korea, Singapore and Taipei, the growth has been revised down to 6.1% each in 2019 and 2020.

However, the lender remains fairly optimistic about South Asia. The projected growth for the region has been pegged at 6.6% in 2019 and 6.7% in 2020. Meanwhile, the inflation projection for Asia has been revised up to 2.6% for both 2019 and 2020.

However, broader encouraging economic conditions in developing Asia will more than offset the inflationary pressure. Under such circumstances, investing in funds from the region seems prudent.

Japan Remains Optimistic About Economic Recovery

Per the latest report from Japan’s Cabinet Office on Jul 23, the country’s government maintained that Japan’s economy has been recovering at a moderate pace. Moreover, Japan’s government also lifted its assessment of the industrial output in the country for the first time in over 18 months. The country now thinks its industrial production would improve to flat from weak.

The report also states that this improvement will be achieved on the back of robustness in production of automobiles in the country as well as construction machinery. Furthermore, the fact that Japan’s industrial production surged to its fastest pace in more than a year, suggests that a trade war environment will not act as a major impediment to Japan’s growth.

4 High Yield Mutual Funds to Buy

We have, thus, selected four mutual funds from Asia carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5,000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Matthews Asia Growth Investor MPACX fund seeks to achieve its investment objective by investing the majority of its assets in preferred and common stocks of companies located in Asia. It may also invest in convertible securities of Asian companies. MPACX seeks capital growth for the long run.

This Zacks sector – Pacific Rim-Equity product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 15.8%.To see how this fund performed compared with its category, and other 1 and 2 Ranked Mutual Funds, please click here.

MPACX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 1.10%, which is below the category average of 1.20%.

Fidelity Emerging Asia FSEAX fund seeks growth of capital. FSEAX invests a huge portion of its assets in securities of companies that are involved in Asian emerging markets like India. The fund analyses each of the companies’ industry position and financial condition, as well as the economic and market conditions before making investments.

This Zacks sector – Pacific Rim-Equity product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 18.5%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSEAX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 1.02%, which is below the category average of 1.35%.

Matthews Pacific Tiger Fund Investor Class MAPTX aims for growth of capital in the long run. The fund invests the lions’ share of its assets in common and preferred stocks of companies based out of Asia, excluding Japan. However, the fund invests in other developed, emerging as well as frontier countries and markets in Asia.

This Zacks sector – Pacific Rim-Equity product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 7.6%. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

MAPTX carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 1.04%, which is below the category average of 1.35%.

Fidelity Japan FJPNX fund seeks long-term capital growth. The fund invests a large portion of its assets in securities of companies in Japan. FJPNX invests in common stocks of companies that are influenced by economic conditions of Japan.

This Zacks sector – Japan-Equity product has a history of positive total returns for more than 10 years. Specifically, the fund's return over the YTD benchmark is 13.2%.To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FJPNX carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 1.05%, which is below the category average of 1.26%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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