Mirae Asset (USA) Launches First Mutual Funds in the U.S.
Emerging Markets Leader Offers Six Mutual Funds for U.S. Investors
September 27, 2010
Mirae Asset Global Investments, one of the world's largest emerging market equity investment managers, today announced the launch of its first six mutual funds in the U.S. The Mirae Asset Discovery Funds aim to take advantage of the macroeconomic effects currently redefining the world's emerging market economies.
"We are emerging market experts. It's what we do," said Jay (Hun Jun) Jang, President and CEO of Mirae Asset Global Investments (USA). "Because of our global portfolio management capabilities, we are able to offer single-country, regional and global emerging market funds. We look for companies with a sustainable competitive advantage by implementing the research-intensive, bottom-up approach used since Mirae Asset's inception in 1997."
The mutual funds, which have Class A, C and I shares, include:
- Global Emerging Markets Sector Leader Fund (MALGX, MCLGX, MILGX)
- Asia Sector Leader Fund (MALAX, MCLAX, MILAX)
- China Sector Leader Fund (MALCX, MCLCX, MILCX)
- Brazil Sector Leader Fund (MALBX, MCLBX, MILBX)
- Global Emerging Markets Great Consumer Fund (MECGX, MCCGX, MICGX)
- Asia Great Consumer Fund (MGCEX, MGCCX, MGCIX)
Mirae Asset's research concludes that ongoing socioeconomic changes in emerging market nations will continue to support domestic business expansion. Mirae Asset seeks to capture the beneficial impact these macroeconomic effects will have on emerging market equities through the firm's Sector Leader and Great Consumer investment approaches.
The "Sector Leader" Funds
The Sector Leader funds invest in companies that Mirae Asset believes to be capable of achieving or maintaining a dominant position within their respective industries. Mirae Asset judges a company based on the sustainability of its long-term business model and the competitive advantage of its business strategy. Informed by years of on-the-ground research, the firm weighs a stock's potential against a backdrop of the long-term macroeconomic trends in the economy where the company conducts business. The investment strategy employs portfolio construction and risk management techniques designed to broaden each Fund's exposure across a range of industries.
The "Great Consumer" Funds
Mirae Asset defines the "Great Consumer" effect as the collective market force of emerging market nations' rapidly growing middle class. As wealth increases broadly within the traditionally low per capita GDP1 economies of the world, consumers' newfound purchasing power can help introduce attractive – and in some cases never previously available – investment opportunities. Mirae Asset believes population growth, increasing industrialization, income expansion and other macro trends will help to sustain the rapid growth of many emerging market economies as their middle classes seek to accumulate wealth and pursue a higher quality of life. In fact, a recent McKinsey & Co. report estimated that the emerging middle class currently spends $6.9 trillion annually, and this figure is expected to rise to $20 trillion over the next 10 years2.
The two Great Consumer funds employ a bottom-up methodology, investing in companies across a range of sectors that stand to benefit from increasing domestic consumption in the emerging markets. An attractive Great Consumer stock can be found not only among the consumer staples and consumer discretionary sectors, but also within any industry for which growing domestic consumption can be a catalyst for profits, either directly or indirectly.
Significant Long-Range Themes
Mirae Asset's investment strategy is consistent with the work of many global economists and researchers who have for years tracked the evolution of the world's economies and the major themes that shape them.
With numerous publications in this area, the World Bank estimates that the global middle class is likely to grow from 430 million in 2000 to 1.2 billion in 2030. According to Euromonitor International, consumer spending in emerging markets is forecast to grow by an average annual rate of 10.4% between 2010 and 2020 in U.S.-dollar terms with China, India, Brazil and Russia being the largest consumer markets in terms of total spending3. Similarly, the IMF reports that emerging market economies are likely to grow at least twice as fast as the U.S. in coming years, and says that the share of emerging and developing economies in world GDP is expected to overtake advanced economies by 2014.
Mirae Asset, one of the world's most experienced emerging market equity investment managers, has created an innovative opportunity for U.S. investors by designing investable products based on these themes.
Mirae Asset's investment professionals in New York, Hong Kong and São Paulo manage the six mutual funds. Mirae Asset has made a significant investment in state-of-the-art telecommunications equipment through which portfolio managers around the globe collaborate efficiently and seamlessly. Because the strategies are predominantly bottom-up, Mirae Asset portfolio managers conduct primary research and collaborate with analysts and researchers within the firm to make their investment decisions. As of June 30, 2010, the firm had more than 160 investment professionals worldwide.
1 Gross domestic product (GDP) is defined as the market value of goods and services produced by labor and property in a single country.
2 McKinsey & Co. is neither affiliated with, nor employed by, Mirae Asset Global Investments.
3 Euromonitor International is neither affiliated with, nor employed by, Mirae Asset Global Investments.
An investor should consider an investment in the Funds as a long-term investment. The Funds' returns will fluctuate over long and short periods.
Important information for investors considering the Mirae Asset Discovery Funds: The Funds cannot guarantee that they will achieve their investment objective. As with all investments, there are certain risks of investing in the Funds, and you could lose money on an investment in the Funds. Certain risks related to an investment in the Funds are summarized below.
1) Information about investing in any of the Funds: Depositary Receipts Risk - There may be less material information available regarding issuers of unsponsored depositary receipts and, therefore, there may not be a correlation between such information and the market value of the depositary receipts. Depositary receipts are generally subject to the same risks as the foreign securities. Emerging Markets Risk - The risks of foreign investments are typically greater in less developed countries, which are sometimes referred to as emerging markets. For example, political and economic structures in these countries may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of inflation, deflation or currency devaluation, which could hurt their economies and securities markets. For these and other reasons, investments in emerging markets are often considered speculative. Equity Securities Risk; Stock Market Volatility - Equity securities include common and preferred stocks. Stock markets are volatile. The value of equity securities is affected by changes in a company's financial condition and overall market and economic conditions. Preferred stock may be subject to optional or mandatory redemption provisions. Foreign Securities Risk - Foreign investments may be subject to different and, in some cases, less stringent regulatory and disclosure standards than U.S. investments. Also, political concerns, fluctuations in foreign currencies and differences in taxation, trading, settlement, custodial and other operational practices may result in foreign investments being more volatile and less liquid than U.S. investments. Because foreign investments are typically issued and traded in foreign currencies, their values may be significantly affected by changes in exchange rates between foreign currencies and the U.S. dollar. Foreign regulatory and fiscal policies may affect the ability to trade securities across markets. Foreign markets may also differ widely in trading and execution capabilities, liquidity and expenses, including brokerage and transaction costs. Brokerage and transaction costs are generally higher for foreign securities than for U.S. investments. Geographic Concentration Risk - A small number of companies and industries may represent a large portion of the market in a particular country or region, and these companies and industries can be sensitive to adverse social, political, economic or regulatory developments in that country or region. High Portfolio Turnover Risk - The Fund may engage in active and frequent trading to achieve its principal investment objectives. This may result in the realization and distribution to shareholders of higher capital gains as compared to a fund with less active trading policies, which would increase an investor's tax liability unless shares are held through a tax deferred or exempt vehicle. Frequent trading also increases transaction costs, which could detract from the Fund's performance. Inflation Risk - Inflation risk is the risk that the present value of assets or income from investments will be less in the future as inflation decreases the value of money. The present value of the Fund's assets and distributions can decline as inflation increases. Large-Cap Securities Risk - Securities issued by large-cap companies tend to be less volatile than securities issued by smaller companies. However, larger companies may not be able to attain the high growth rates of successful smaller companies, especially during strong economic periods, and may be unable to respond as quickly to competitive challenges. Legal and Regulatory Risk - The regulatory environment for funds is evolving, and legal, tax and regulatory changes could occur that may adversely affect the Fund. Selection Risk - The securities selected by the Fund may underperform the market or other securities selected by other funds. Small- and Mid-Cap Securities Risk - Securities of small- and mid-sized companies may be more volatile and subject to greater risk than securities of larger companies. Small- and mid-cap companies may have limited financial resources, product lines and markets, and their securities may trade less frequently and in more limited volumes than the securities of larger companies, which could lead to higher transaction costs.
2) Additional information about investing in Global Emerging Markets Great Consumer Fund or Global Emerging Markets Sector Leader Fund or Asia Sector Leader Fund or Asia Great Consumer Fund: Asset Allocation Risk – The Fund's ability to achieve its investment objective will depend, in part, on the Investment Manager's ability to select the best allocation of assets across the various emerging market countries. There is a risk that the Investment Manager's evaluations and assumptions may be incorrect in view of actual market conditions.
3) Additional information about investing in the Brazil Sector Leader Fund and the China Sector Leader Fund: Non-Diversification Risk - The Fund is a non-diversified fund. Because the Fund may invest in securities of a smaller number of issuers, it may be more exposed to the risks associated with and develoments affecting an individual issuer than a fund that invests more widely.
4) Additional information about investing in the Asia Sector Leader Fund and the Asia Great Consumer Fund Risks of Investing in Asia – Because the Fund concentrates its investments in Asia, excluding Japan, the Fund's performance will be closely tied to economic and political conditions in Asia and geopolitical conditions in Asia, including the risk of severe political and military disruption. As a region, Asia comprises countries in all stages of economic development, and many of the economies of these countries are intertwined, which may cause them to experience recessions at the same time. In addition, natural disasters might have a substantial economic impact on affected regions, at least temporarily.
5) Additional information about investing in the Brazil Sector Leader Fund: Risks of Investing in Brazil – Because the Fund concentrates its investments in Brazil, the Fund's performance will be closely tied to economic and political as well as geopolitical conditions in Brazil and its surrounding region, including Latin American countries. Certain political, economic and legal factors have contributed to, and will continue to contribute to, a high level of price volatility in the Brazilian equity and currency markets and could adversely affect investments in the Fund. Commodity Exposure Risk – The agricultural and mining sectors of Brazil's economy account for a large portion of its exports and the economy is, therefore, particularly sensitive to fluctuations in commodity prices. Any changes in these sectors or fluctuations in the commodity markets could have an adverse impact on the Brazilian economy.
6) Additional information about investing in the China Sector Leader Fund Risks of Investing in China - Because the Fund concentrates its investments in China, including Hong Kong and Macau, the Fund's performance will be closely tied to their economic and political conditions and the geopolitical conditions in China. Military conflicts, in response to either internal social unrest or conflicts with other countries, could disrupt economic development in this region. Territorial border disputes persist with certain neighboring countries. In addition, natural disasters might have a substantial economic impact on affected regions, at least temporarily. In addition, changes in the regulatory environment may also impact the securities market, and other changes in the legal, tax and regulatory regime in China may also adversely affect the performance of the Fund.
Investments in the Funds involve risk, including the possible loss of principal. This press release is not a solicitation to buy nor offer to sell securities. An offering can only be made by prospectus, which can be obtained from Mirae Asset USA.
An investor should consider the Fund's investment objectives, risks, charges and expenses carefully before investing. This and other important information about the investment company can be found in the Fund's prospectus. To obtain a prospectus, please contact your financial advisor or please call 1-800-335-3412. Please read the prospectus carefully before investing.
Foreside Fund Services, LLC, www.foreside.com. The Mirae Asset Discovery Funds are distributed by Funds Distributor, LLC.
About Mirae Asset Global Investments
Mirae Asset Global Investments is one of the world's largest investment managers in emerging market equities (Investments & Pensions Europe, January 2014). With over 550 employees, including 123 dedicated investment professionals, Mirae Asset offers a breadth of emerging markets expertise. Mirae Asset's offices are located in Australia, Brazil, Canada, China, Colombia, Hong Kong, India, Korea, Taiwan, the U.K., the United States and Vietnam. The firm manages over $56 billion in assets globally through a diversified platform to offer market-leading franchises in traditional equity and fixed income products, ETFs and alternative strategies, such as real estate, private equity and hedge funds. Mirae Asset Global Investments (USA) LLC is focused on providing equity and fixed income investment advisory services to mutual funds, foreign investment trusts and institutions. (www.miraeasset.com)
Makovsky + Company