1. Bought Shares in Matthews Asian Growth and Income (MACSX) (See Disclaimer): Earlier today, I discussed nibbling on one of the Asia-Pacific ETFs and decided against buying one of those. All of them had close to a 40-50% weighting in financial stocks. Instead, I bought today some shares in MACSX, which has a higher expense ratio at 1.16% than the ETFs, but provides me with something that I do not have currently have in any significant amount. About 30% of the fund is devoted to fixed income and convertible bonds from Asian firms. This mutual fund is rated five stars by Morningstar.MACSX - Mutual Fund Quote for Matthews Asian Growth & Income - MSN Money The exposure to financial services is less than the ETFs at around 33%, so I view it as more balanced and diversified than the ETFs. MACSX Fund Portfolio: Investing Also, I do not own any of the top 25 holdings: MACSX - Fund Top 25 holdings Many brokerage firms make this fund available on a no commission basis, a NTF, and a list can be found at MSN Money: MACSX Purchase Info: Investing - MSN Money
I have also owned shares in Matthew Pacific Tiger fund for a long time, which has done well, and I did pare it all the way back to just 150 shares before 2008. I started to buy shares back in January 2009. I am playing with the house's money on that one. I also own shares in Matthews India fund which is close to breakeven for me after a huge rally this year. Morningstar has the Matthews India fund up around 67% this year and 113% over the last six months .MINDX:Matthews India Fund Trailing Return | Morningstar And that gain brought be back close to breakeven on that investment. I also own an ETF for India, EPI, which I may sell at some point later this year. WisdomTree - WisdomTree India Earnings Fund (EPI)
Added: This is a link to the Matthews web site for MACSX: Matthews Asian Growth and Income Fund: Overview - Matthews Asia Funds
2. Recent Development in The EC's Burden Sharing Policy & the Hybrids: I mentioned in a post a few days ago that KBC, a Belgium bank, clarified that it would pay the coupons this year on its hybrid securities, after determining that all payments were mandatory. The EC had requested KBC to defer any non-mandatory payments pursuant to its burden sharing policy. KBC announced that it was offering to buy 1.6 billion Euros in principal amount of its hybrids at 70% of their par value. Bloomberg.com It is not clear yet whether this offer has been sanctioned by the EC or is being done to test the EC's resolve in enforcing its burden sharing policy. It would be be strange for the EC to allow this large expenditure of capital for a firm that is relying on over 5 billion Euros from the Belgium government as part of its TIER 1 Capital, and then turn around and try to cause the bank to defer coupon payments on those very securities.
I am aware that the British regulator recently stopped RBS from calling some of its subordinated debt. MarketWatch
It is difficult to figure out what is happening in the U.S. and even more difficult for a U.S. investor to try and read the tea leaves left on European soil.
More interesting developments in Europe reg. ING today: The European Commission announced that it has doubts whether ING pays an adequate price for the Alt-A loan portfolio guarantee issued by the Dutch state. The EC thinks a higher price would be appropriate without specifying details. According to an analyst, in a worst-case scenario for the revaluation of the portfolio, ING could suffer a hit of 60 basis points to its core Tier I ratio. ING had a Tier I ratio of 7.3 percent on June 30, so such a hit would take it below minimum levels and leave it with a capital shortfall. If this were to happen, a deferral of coupon payments on ING hybrids seems inevitable.
ReplyDeleteI just posted a few minutes ago some comments about this development. I wonder if the U.S. authorities would view a similar guarantee for a European subsidiary of Citigroup as impacting competition in the U.S. "common market".
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