Looking east: a tight focus on China's emerging markets keeps this fund in the black

Entrepreneur, June, 2004 by Dian Vujovich

You don't need a fortune cookie to ten you that investing in China can pay off--last year's fund performance numbers can do that. The average China Region fund was up over 63 percent in 2003. But even Confucius knows it takes more than luck to make money.

Ask Mark Headley, a co-manager of the Matthews China Fund (MCHFX) portfolio, what sets this fund apart from other China Region funds, and he'll say it's the fund's focus on China rather than the entire region. "We've always had a focus on companies that, if they are not purely Chinese, are Hong Kong ones with strong interests in China," he says. That investment philosophy has paid off: For the three- and five-year periods ending March 31, the Matthews China Fund has ranked top in its category, according to Lipper.

Keep in mind, not an China Region funds are the same. Funds under this Lipper category heading range from those dominated by big Hong Kong blue chips to ones that invest throughout the region. It also includes others, like the Matthews China Fund, in which the approximately 40 companies in its portfolio represent more of a pure play on Chinese companies.

So while this region's story is promising, the truth is that the markets in China and the surrounding region are still considered emerging and full of challenges. Investors should think long term, and be prudent when making their investment decisions.

DIAN VUJOVICH is an author, syndicated columnist and publisher of fund investing site www.fundfreebies.com