Daftary to Take World by Storm

We spoke on the day that first-quarter figures showed that U.S. GDP growth had fallen to just 1.3%, its slowest rate in four years. As Daftary pointed out, the companies on Wall Street that had the best quarter often did so thanks to overseas gains.

Everyone knows how fast the Chinese economy is growing in percentage terms. But of course that's from a very small base, right?

Wrong. Daftary points out a fact that few in America realize: In actual dollar terms, China's growth last year nearly matched that provided by the U.S. "China is adding nearly as much GDP a year as the U.S.," he says.

Based on the latest figures, you can pretty much assume it will overtake the U.S. soon -- possibly as early as this year.

Foreign stocks, mostly from developed countries, already make up 18% of the portfolio in the domestic fund. It has a 25% limit for overseas equities.

The new fund will be structured along the same lines as the current one. Daftary's DG Capital, in Boston, will invest the money. Quaker Funds, in Malvern, Penn., will do almost everything else, from administration to marketing. Daftary will be free to invest anywhere, take some short positions, and hold lots of cash when he cannot find great opportunities.

And although the global stage is bigger, Daftary promises to stick to the same tried-and-true techniques that have worked for him so far here in the U.S. "It's going to be the same thing that we do when we manage money domestically," he says. "It's just taking the process to another level. Find fast-growing sectors in the economy, and then stock-pick our way into them."

Jeff King, founder and head of Quaker, expects the fund to start with just $5 million to $10 million. Most of that, he says, will come from those directly involved. They're putting their own money on the line. "Manu has agreed to put in $1 million or $2 million," King tells me. "I'm personally going to put in $1 million. There are board members and trusts who have committed, along with various huge Manu fans."