Tempted by a touch of spice

By THIS IS MONEY
Updated: 19:00 EST, 17 April 1999

Many investors caught up in the last-minute stampede into Peps ignored the emerging markets of the Pacific rim.

Most invested in the UK, while the more adventurous chose Europe.

Jason Hollands of independent investment adviser Best Investment in London says: 'Investors may be ignoring the Pacific rim at their peril. The time to buy in these markets is when they are cheap.

'The Far East has fallen sharply over the past couple of years, but there are now good signs of recovery.'

It is understandable that investors shun the region after seeing the domino effect of the Asian crisis.

But some invbstore, like, David and Margaret Trueman from the Isle of Wight, have always included Far Eastern exposure in their investment portfolio.

David, 63, a retired executive with electronics giant Siemens, says: 'I know these markets have been volatile, but we have only a small percentage of our money invested there.

'We view it as fun money, which may do well over the long term.'

David has invested in Aberdeen Asia Pacific and Perpetual Asian Smaller Markets, both unit trusts. He also has a single-company Pep of HSBC shares, partly because of its Far East links.

However Andrew Hunt of fund management group Dresdner RCM is still cautious about the Far East as a home for small investors' money. 'It is better to buy exposure through international companies who do business in these countries,' he says.

Wai Man Cheung of WMC Investment Management in Blandford Forum, Dorset, believes investors should stick to the more developed Far East markets including Hong Kong, Singapore and Malaysia.

He is also optimistic about China. 'It is such a big market and has great growth potential,' he says.

Justin Modray of independent financial adviser Chase De Vere believes that investors should add Far Eastern spice to their portfolios, but limit their exposure to about 15%. In common with other experts, he suggests investing a little at a time on a regular basis.

One key advantage of individual savings accounts (Isas), which replaced Peps earlier this month, is that investors can now shelter more non-European share investments from tax.

The brave could invest £7,000 in Far Eastern funds between now and next April, compared with the maximum £1,500 allowed annually under the Pep umbrella.

For Asian funds that exclude Japan, Modray and Hollands tip Fidelity South East Asia unit trust, which focuses mainly on Hong Kong, Korea, Singapore and Taiwan and has consistently beaten regional market indices. An investment of £1,000 in this fund six months ago is now worth £1,338.

Both also like Credit Suisse Orient unit trust, which has turned £1,000 into £1,233 in six months. Wai likes HSBC's Hong Kong Growth unit trust.