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September 01, 2006 at 04:00 AM
Japan has long dominated the economies of what is called the “Asia-Pacific” region. However, in recent years as Japan’s economy faltered, the landscape there has changed dramatically with the emergence of smaller powerhouses like South Korea and Taiwan, and the evolving rise of Mainland China as an economic juggernaut.
While most Asia-Pacific mutual funds tend to keep sizable positions in Japan (still the world’s second-largest economy), such portfolios can now broadly diversify as the region offers a wide array of investment options.
East Asian countries (including Japan) have benefited tremendously from strong domestic demand, high consumer spending, rising employment, higher wages, political reforms and exports to neighboring China. However, these nations remain particularly vulnerable to high energy prices and the strength of the U.S. economy–presenting some challenges in the current climate.
One of the top funds in this sector, the $244-million NACM Pacific Rim Fund (PPRAX), has two-thirds of its assets invested in Japan and Australia. Financials and industrials (at 52% total) represent the portfolio’s two largest sectors.
