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Portfolio > Mutual Funds

Alger Tells China Story, Closes Some Funds

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While recalls on some goods made in China have been grabbing headlines, certain mutual funds that focus on China remain untainted by the scandals. The China U.S. Growth Fund (CHUSX), with retail assets of about $120 million, “isn’t exposed to these issues,” says Alger’s Zachary Karabell, who serves as executive vice president, chief economist and portfolio manager.

The fund, which rose nearly 30 percent in the first seven months of 2007 and has a five-star Morningstar rating, is a separately managed mutual fund run by Fred Alger Management. It invests in both Chinese and U.S. companies benefiting from China’s growth, such as Hong Kong-based companies like China Mobile as well as U.S.-based firms including Amgen.

Karabell says he took a few calls from advisors about the relationship of health, safety and trade issues affecting U.S.-Chinese relations. “But we’re not seeing any disinclination to invest,” he explains.

The portfolio manager meets regularly with advisors around the country at conferences like Pershing’s INSITE.

Alger has nearly $12 billion in assets under management, Karabell says, with $8 billion held in funds. Some $300 million are invested in its Spectra no-load funds sold via financial advisors. Alger’s retail assets are about $6.5 billion overall, with financial advisors accounting for more than $2.5 billion and institutional investors/SMAs/401(k) accounts representing about $2.7 billion. Alger-managed investments in annuity products have amassed about $2 billion in assets.

“We have good momentum overall right now, especially the China-U.S. fund and health-sciences fund,” explains Karabell. “It’s easy to tell our story to advisors because it’s been consistent over the long term.”

With an eye to investing in dynamic change, Alger does have to adjust its research at times and has experienced some rocky periods, he admits. “But we’re focused on being an investment-management boutique. That’s our one and only story.”

Some Alger funds have been closed to new investors after their success at attracting inflows: the Alger SmallCap Growth Fund (A, B and C shares) with $535.5 million in assets, the Alger SmallCap Growth Institutional Fund (I and R shares) with $721.1 million and the Alger American Fund-Small Capitalization Portfolio (O and S shares) with $663.8 million as of June 1.

Janet Levaux is the managing editor of Research; reach her at [email protected].


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