Korea’s Top-Performing Fund Goes Global as Locals Shun Kospi

November 26, 2013 Leave a comment

Korea’s Top-Performing Fund Goes Global as Locals Shun Kospi

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), 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.

MasterCard, Starbucks

The Kospi gauge dropped 0.3 percent to 2,010.76 at 10:40 a.m. in Seoul, halting a two-day gain. The MSCI Asia Pacific Index fell less than 0.1 percent.

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), Anheuser-Busch InBev NV (BUD) 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.”

To contact the reporter on this story: Sharon Cho in Seoul at ccho28@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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