Korean funds rise to top as HK sinks to bottom

Korean funds rise to top as HK sinks to bottom

Nick Edwards, Reuters, Hong Kong

South Korean mutual funds were back on top in February,
delivering the best month-on-month returns for investors in Asia
of 9.6 percent and outpacing funds focused on Thailand and India,
according to new industry data.

Korea's return to the top spot it secured as the best for fund
investors in 2001 was at the expense of Indonesia, which slipped
from first to fourth, data from fund tracking firm Lipper Asia, a
Reuters company, revealed.

Indonesia-themed funds delivered an average of 5.01 percent to
investors in February, anemic compared with January's jump of
20.03 percent, but still respectable compared to the Jakarta
Stock Exchange which gained 0.4 percent over the month.

In the 15 Asian fund sectors analyzed, nine beat the Morgan
Stanley Capital International (MSCI) Far East Free ex-Japan Index
rise of 0.16 percent -- the key benchmark for most funds
investing in the region.

The US$19.96 million Schroder Seoul fund, managed by British
investment house Schroders, was the best overall fund returning
16.34 percent in February, 70 percent better again than the 9.61
percent rise in the value of Korea's KOSPI.

But while Korean funds -- consistent after their 9.45 percent
growth in January -- were February's big winners on average,
India-focused funds made strong individual showings, snagging
three of the top five slots for single funds.

HSBC saw its Indian Growth and Indian Equity (US$) funds head
the list of best performers in their 15-strong India fund peer
group, with returns of 14.23 percent and 13.89 percent, making
them Asia's second and third best funds in February overall.

SG Asset Management's Sogelux F Equities Indian Subcontinent
fund also added 12.36 percent to rank fourth in the region.

Fund managers are generally positive about the prospects for
India after a pro-reform budget, despite the worst religious
riots in a decade and setbacks for the country's ruling Bharatiya
Janata Party (BJP) in state elections last month.

"Within our regional model portfolio we continue to overweight
India," ING Investment Management, which has some $30 billion of
assets under management in Asia, said in a client note.

"On balance, the budget is pragmatic and (has) less rhetoric
as compared to the budgets of the past," it said.

Funds focused on the smallest markets of Southeast Asia also
had a broadly positive month, their second good showing in a row,
though well down on January's leap upwards.

Thai funds scored the second highest average return in the
region of 8.32 percent, compared with their third place 18.07
percent in January, and Philippine-themed funds made 3.35 percent
in fifth place, versus January's 18.6 percent growth second spot.