Dear Friends,

Below is an update of the performance of the funds I recommended so far (sorted in order of 1 month performance)

As expected, First State Global resources and United Gold fund are the best performers due to Gold!! Glorious gold! On the other hand, the highly anticipated BRIC fund delivers the lowest return with a measly 2% over the last 1 month. Once again, this is due to stagnant performance of our dear China.

Even the more diversified Aberdeen Pacific Equity Fund perform better than BRIC fund which is the largest emerging market. This is because Aberdeen has a larger allocation into South East Asia including Singapore, Thailand and Indonesia which are the better performers.  

And speaking of Indonesia, I am starting to move funds into it due to…

Why Invest into Indonesia

1)      Largest Commodities Mining Country is SEA

The abundance of Indonesia’s natural resources is evident in all sectors, particularly land resources, mines & minerals, agriculture/plantation, marine & fishery, forestry, and natural scenery. With increasing population around the world, food demand will increase and Indonesia will profit from it.

2)      Huge Domestic Demand

With a total population of 210 million, which was just reached in the early 1997, and a fast-growing middle class (totaling around 35 millions), Indonesia is indeed a huge, potential market. As the people welfare improved, demands for goods and services do not merely rely on quantity, but quality, variability, and on-time availability.     

3)      Stable Political Situation

We don’t see riots or any red shirt protests in Indonesia. With stable politics, more external parties are willing to invest inside the country.

4)      Increasing FDI (Foreign Direct Investment)

http://www.reuters.com/article/idUSJAK11838320100803 China has reported to invest $25 billion into Indonesia.

5)      Stronger Economic Base

Indonesia is undergoing a transformation from agricultural-base economy to an industrial-base economy. Manufacturing industry has become the backbone of Indonesia’s export drive. Changes in composition of GDP by sectors during the 1980s and 1990s showed that such situation is true. Ever-increasing volume and value of industrial products have made the national economy not depended merely on oil & gas exports. Since mid-1980s, non-oil & gas export revenues have been jumping up beyond the oil & gas exports; and during the last-few year oil & gas export revenues constitute even less than a quarter of the total export income.

            However, investing into a pure Indonesia fund is not for the faint hearted due to its high volatility. I will recommend Legg Mason SEA fund to get exposure into other counties instead.

Action Plan:

If you are a pure BRIC investor and running out of patience on China,

I am recommending a switch to Aberdeen Pacific Equity fund.

If you wish to wait for BRIC to breakout and have extra funds to spare,  

I am recommending to stay invested with BRIC and start investing into Pacific Equity.

If you share my optimism on Indonesia, we can start allocating a portion into SEA fund.

Thank you.

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