Seeking Advantage in Asia

Mutual Fund Q&A:

Author: Ticker Magazine
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Last Update: 9:59 AM EST June 14 2007

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Anthony Cragg		“We are looking to exploit inefficiencies. The beauty of Asia and emerging markets is the fact that those inefficiencies do exist. In a much more mature market like the U.S., the capacity to add value is less. In Asia there is plenty of room to get ahead of the crowd.”
		Wells Fargo Advantage Asia Pacific Fund

While most investors tend to go with the flow when exploring the Asian markets, the Wells Fargo Advantage Asia Pacific Fund is using every tool at its disposal to get in early on new investment ideas. In order to take advantage of all the opportunities in developed and emerging Asian countries, portfolio manager Anthony Cragg seeks both growth and value situations, as well as larger- and smaller-cap stocks.

Q: Do you hedge against currency risk?

A: We are bullish for Asian currencies. We also believe our investors usually take that view, so if they want to put money in Asia, they are deliberately divesting away from the dollar. I would say that 95 times out of 100, they want the diversification into other currencies.

It can be expensive and difficult to hedge currencies in Asia. There are, obviously, investment hedges you can take. If we think currency is going to weaken, there are stocks we can buy predicated on that so we can make money, even in the declining currency, but typically we don’t hedge. The risks are on country and stock levels so we try and restrain overexposure at both those levels.

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