This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Closed-End Funds Offer Emerging Asia at a Discount

NEW YORK (TheStreet) -- Global stock markets continue to push ahead to new all-time highs in many of the most commonly traded indices. In Asia specifically, stock market rallies have come largely as a result of policy actions like the unprecedented stimulus programs put in place by the Bank of Japan earlier this year. These policy strategies are indicative of the broader support central banks have shown in propping the manufacturing sector and regional export markets.

But the elevated stock market valuations seen now can make it difficult for investors looking to gain regional exposure at inexpensive prices. For these reasons, some alternative asset instruments should be considered when looking for long-term value in emerging Asia, as there are still ways to benefit from the immense growth potential in the region.

Exploring Alternatives

One alternative option can be found in closed-end funds, which exhibit some marked differences from more commonly known mutual funds. Specifically, closed-end funds offer a fixed number of available shares. This creates a scenario where share values are tied more closely to the supply and demand visible in the markets, while other investment vehicles tend to be priced based on their net asset values.

This difference is important for investors looking for long-term value opportunities, as many closed-end funds allow investors to buy-in at substantial discounts relative to NAV. With stock markets pushing to extreme highs, closed-end funds provide one of the best options currently available because there's a smaller possibility for downside correction when compared to the benchmark indices.

Growth Positives in Emerging Asia

Asian economies present some well-documented growth opportunities when compared to their more developed counterparts in the West. For 2013, Asian economies are expected to expand at a rate of nearly 6%, which is much higher than the 2.1% projections seen for the U.S., and the stalling 0.2% growth rates seen for the eurozone.


As a partial reflection of this, Asian benchmarks have posted strong rallies so far this year. The MSCI Asia Pacific Index (one of the broadest measures of the region) has seen gains of 11% year-to-date, supported largely by improvements in importing countries (such as the U.S.) and stimulus measures from central banks. Debt levels in emerging Asia are much lower than what is seen in the West, and the region's total contribution to global GDP is expected to grow from the 27% levels seen now to 49% by 2050. When we combine these supportive external factors with the strong fundamentals present in Asian economies, a highly bullish scenario emerges.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,493.37 -69.93 -0.42%
S&P 500 1,925.15 -5.52 -0.29%
NASDAQ 4,352.6390 -17.1340 -0.39%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs