Mary Dean allocates 15% of the client money she manages to international equities through a series of carefully selected mutual funds. Those are funds that invest in those parts of the world she views as offering good growth potential, but that do so in a conservative and well thought-out manner.
“I don’t want anything too volatile because that frightens our clients,” says Dean, managing partner and portfolio manager at fee-only wealth management firm Dean Roland Russell in San Diego.
Nor does Dean wish to traipse to the far corners of the globe to scout out the best opportunities. Instead, she prefers to turn that task over to experienced managers, people who have a solid experience of the world and who have the resources it takes to know what markets to be in, when and to what extent.
Based on that rationale, Dean is a big fan of investment vehicles such as the Matthews funds, in particular Matthews Asia Growth and Income Fund and Matthew’s Asia Dividend Fund.
“These funds are managed by a well-educated team whose process is well thought out, who have a long-term view that they stick to and don’t deviate from,” she said. “We like them for this reason and we don’t want to be more aggressive than what they have to offer because we just don’t want to deal with more volatility.”
Avoiding volatility is even more important today because a growing number of Dean’s clients are young people who, surprisingly, are extremely conservative, she said.
“After what’s happened over the past years, many of our clients can’t take volatility, but young people who are new investors have the greatest fear of volatility, far greater than their parents, who are trying to convince them they need stocks,” Dean said. “Many young people, unlike their parents, have only experienced lackluster markets and seen turmoil, so they more than ever need to feel confident about where we’re investing.”
In endeavoring to keep clients content and boost their confidence levels, Dean looks for mutual funds that scout out stable investment opportunities with growth potential that come at good value, and she herself keeps tabs on the different regions of the world to see where those opportunities lie.
Asia is still, in her opinion, the best place for opportunity and is likely to remain the engine of growth going forward. However, Dean is not interested in seeking out what newer economies like Vietnam, Cambodia or Myanmar may have to offer. Many people are touting these as the next best frontier in Asia, she said, but even if they do make for great opportunities, she considers herself too far away from them for comfort.
Dean also favors funds that have more exposure to Hong Kong stocks than Chinese stocks, she said, given the stability that Hong Kong offers over China.
As for Europe, which more and more people are starting to look at now that there’s greater optimism on the macro front, Dean is of the opinion that some of the best opportunities may already be gone.
“I’ve looked at the companies that everyone talks about, like the Spanish clothes retailer Zara and others that have global exposure, but they seem to have already doubled in value,” Dean said. “There may be others that have some potential, but I’m not a stock picker, so I have to wait and see which funds I’m comfortable with first.”