Want to invest in Asian securities for your mutual funds? You might want to consider staking claim to an office in Hong Kong or even India in order to cozy up to the Asian investment marketplace.
Two small investment management firms recently announced they were establishing research offices in Asia in order to broaden their presence, immerse themselves in the local culture and help them better select securities for the mutual funds they manage.
Hansberger Global Investors of Fort Lauderdale, Fla, sub-advisor to the $246 million Harris Insight International Fund, said last month that it would open a research office in Mumbai, India in the early part of this year. The 10-year-old firm, which specializes in global investing, already maintains satellite offices in Toronto, Hong Kong and Moscow. The firm manages a total of $7 billion.
The opening of the office in India is "important for us," said Ron Holt, president and managing director of research for Hansberger. Right now, India represents one of the fastest-growing emerging markets, and an office there will allow Hansberger to have local knowledge and better understand the market, he added. It isn't unusual since many of the biggest banks already have research offices there, he noted. Holt explained that in 2005, both India and China showed visible signs of truly emerging.
From Chicago to Hong Kong
While Hansberger establishes its second Asian office, Oberweis Asset Management of Lisle, Ill., a Chicago suburb, recently opened its first non-U.S. research office in Hong Kong. The office was opened to support the Oct. 1, 2005 launch of the Oberweis China Opportunities Fund, which invests 80% of its assets in small to mid-sized value stocks, predominantly from Hong Kong, Taiwan and the People's Republic of China. The China fund currently has $6 million in assets and is the firm's fourth mutual fund.
The office was established to provide the firm with better access to local knowledge in an effort to identify emerging investment opportunities in China, said James W. Oberweis, president of the firm, portfolio manager of the funds and son of the firm's founder, James D. Oberweis.
The elder Oberweis formally stepped down from managing assets to focus on his bid for the Republican nomination for a seat in the U.S. Senate in 2001. Although he lost that Congressional bid, he will be seeking the nomination for governor in the State of Illinois in 2006, his son said. "He wants to make the world a better place," he added. As a controlling shareholder of the firm, the elder Oberweis still serves as chairman of the board and its senior research adviser.
Right now, Oberweis' new Hong Kong office has a staff of one. Vanessa Shiu, whose native tongue is Chinese, serves as the director of China research. But the firm is in the process of adding one or two more research analysts, Oberweis said.
"Hong Kong has always been pro-business, and has always been a place dominated by foreign corporations," he continued. It's easier to register a corporation in Hong Kong than in New York City, he quipped. But the cost for Hong Kong real estate doesn't come cheaply, he admitted. The cost per square foot for a Hong Kong office greatly exceeds that of Chicago, he noted.
Actually, Oberweis hasn't been in its new custom-built suburban Chicago office complex all that long. Before moving into its new digs, it was headquartered inside a bona-fide milk dairy located in nearby East Aurora. "We had one floor, and the dairy had the second floor," Oberweis admitted.
Why manage money from offices located inside a dairy complex? Because the building is owned by Oberweis Dairy, the family-owned business, to which, the younger Oberweis assured, he is not the heir-apparent. One perk of the previous location was the boardroom, which had a built-in freezer loaded with free ice cream, he commented.
Trekking to Asia?
Is it necessary to establish an Asian satellite research office to be a serious player in the Asian markets? That depends on who you ask.
While many of the largest investment management firms maintain managers and analysts in Asia, other prominent firms haven't bought into the idea that you have to be there to invest there.
Matthews International Capital Management of San Francisco, which manages $4.5 billion in assets, including a family of eight Asian-centric mutual funds, is perfectly happy researching securities from its California beachhead.
"We never want to have a divided team and believe that investment professionals working in multiple offices in multiple countries is a disadvantage, versus one team in one place traveling regularly, but working together," said Mark W. Headley, president of Matthews. "We might one day have an office in Asia, but the investment team will remain in San Francisco where we can follow the entire region objectively without the local biases that occur when sitting in Tokyo, Hong Kong or Singapore."
Columbia Management of Boston, the asset management arm of Bank of America, also doesn't have an Asian-based research office, although it manages the $92 million Columbia Greater China Fund.
"It depends on the investment style of the fund," said Columbia spokesman Tom Gariepy. "We tend to take time to get to know the companies, and we tend to invest for the long term."
Not only do the Columbia fund's managers travel frequently to China to attend meetings and events there, but Columbia increasingly meets with management teams from Chinese companies coming to the U.S. to meet with investment personnel, he said.
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