Buying A Stake In Southeast Asia's Boom

Stock markets of less developed countries are one of the hottest investment areas going. So investors are understandably fascinated by the potential in Southeast Asia, where the economies of some countries are poised to grow 6% to 10% during the decade, vs. 2% in the U.S.

For the small investor, one of the best ways to get a stake in these markets is through the two Southeast Asian open-end mutual funds. "It's not imprudent for someone to consider this as part of a diversified portfolio," says Craig Litman, co-editor of San Francisco-based L/G No-Load Fund Analyst.

If you wanted to play the enormous growth in China, for example, it would be difficult to invest directly in fledgling Chinese companies. But you could buy into the Newport Tiger Fund, which has large holdings in Hong Kong companies that are profiting from the cheap labor and land now available in southern China. The fund, which has 48% of its $100 million in assets in Hong Kong, 6% in cash, and the rest spread among emerging countries, such as Malaysia and Singapore, has risen 30.63% through Nov. 12. Litman gives high marks to its San Francisco-based manager, Jack Mussey, whose philosophy is to concentrate on stocks of established growth companies, such as Hongkong Shanghai Bank.

TEAMWORK. Expenses of the Newport Tiger Fund are expected to be under 1.8% in 1992, and it carries a load. When purchased directly from World Funds (800 527-9500) in Richmond, Va., you pay 5%. But you can lower that a bit if you buy through one of the many financial advisers who sell it.

If you want to avoid any load, Litman suggests T. Rowe Price New Asia Fund, launched in September, 1990. With $297 million in assets, it is run out of Hong Kong by part of the team that manages T. Rowe Price International Stock Fund. Up 16% through Nov. 12, New Asia Fund holds 37% of its assets in Hong Kong, 17% in Australia and New Zealand, 6% in cash, and the rest in Singapore, Thailand, and other Asian countries.

Betting on developing Asian countries individually can be risky, as investors learned when the Hong Kong stock market took a 22% dive after the bloody 1989 uprising in Beijing's Tiananmen Square. But the Southeast Asia funds are diversified, so they can better withstand the shocks that rock any one country. Since capitalism seems to be flourishing in that part of the world, these funds are one way small investors can get a piece of the action.