BRIC's neighbors are where the value is, Fred Alger manager says

Markets like Taiwan offer under-the-radar investment opportunities

Feb 7, 2011 @ 4:15 pm

By Jeff Benjamin

The investment opportunities in the emerging markets have spread well beyond just the core of Brazil, Russia, India and China, according to Dan Chung, chief executive and chief investment officer at Fred Alger Management Inc.

“The growth of the BRIC core is having a profound effect on the growth of neighboring countries,” he said. “When it comes to the emerging markets, the opportunity and the growth is clearly in front, not behind, especially for those neighboring countries.”

Alger, which has $16 billion under management, launched its second international mutual fund — the only one dedicated to emerging markets in December, the Alger Emerging Markets Fund Ticker:(AAEMX).

The Alger China-U.S. Growth Fund Ticker:(CHUSX), which was launched in 2003, has provided the fundamental research team a firm grasp of one the fastest growing emerging markets.

But the new fund is managed by a team that came over from PineBridge Investments, which was formerly the mutual fund business of American International Group Inc.

The team, which managed $2 billion at PineBridge, includes Deborah Velez Medenica, Siang Meng Tan, and Carla Cantreva-Baessler.

Mr. Chung acknowledged that some of the emerging markets have moved into the “fairly valued range,” but said the opportunities still abound, and retail investors remain generally underexposed to emerging markets.

“Right now, we view many of the BRIC countries as neutral or unattractive, relative to other emerging countries,” he said.

For example, he pointed out that China and Brazil are in the process of trying to manage inflation with higher interest rates.

That process, he explained, can slow economic growth.

“However, Taiwan is clearly seeing the benefits of being China's first cousin in Asia, as many of the trade barriers between the two countries are starting to fall away,” Mr. Chung said.

“There is a similar situation in Latin America, where we see more opportunities in Chile and Colombia than we see in the Brazilian market.”

The new fund is designed to hold about 100 securities, many of which will be purchased on the local exchanges when that is optimal.

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