A Strong Faith in Asia's Growth

Fund Manager Favors Small Companies Across the Region

Anthony Cragg, manager of the Strong Asia Pacific Fund, is betting on Asian consumers to spark economic growth and extend his top performance for a fourth year.

Cragg's fund, whose annual return of 13 percent during the past three years ranks it ahead of 24 of 26 Asian stock mutual funds tracked by Bloomberg, owns shares of companies including Nomura Holdings Inc., Japan's largest brokerage; Singapore Press Holdings Inc., the city-state's biggest newspaper publisher; and Pantaloon Retail India Ltd., a fashion retail chain.

"Too many people approach Asia as it correlates to what happens in the West," said Cragg, 48, who has invested in Asian equities since 1980 and now works in Evergreen, Colo. "I am a huge believer in Asia."

Cragg is limiting investments in makers of computer equipment and semiconductors, whose fortunes are tied to companies such as Intel Corp., because rising interest rates in the United States may curb corporate demand for new technology. His fund has 4.7 percent of its $110 million in computer-related stocks, compared with the 15 percent weighting of the Morgan Stanley Capital International Asia-Pacific Index.

Cragg's fund rose during the past three years at an annual pace that more than tripled its benchmark. The MSCI Asia-Pacific Index gained 3.5 percent in the period. This year, the Strong Asia fund added 2.8 percent, including reinvested dividends, lagging behind the benchmark's 6.1 percent return.

London-born Cragg moved to Asia in 1978 after getting a master's degree in English literature from Oxford University. He taught English to business students at Japan's Nagoya University of Commerce before switching to money management two years later. Cragg lived in Asia until 1986; his first son was born in Tokyo.

He worked at Gartmore Investment Management and Dillon Read International Asset Management in London, where he oversaw Asian investments. Cragg joined Strong Capital Management Inc. in April 1993 and started the Strong Asia fund eight months later.

Strong Capital agreed in May to be bought by Wells Fargo & Co. for an undisclosed amount after settling allegations of engaging in improper trading. Cragg said he and his fund will join Wells Fargo.

"Asia isn't something you can dip into from time to time, trying to make a quick killing," he said. "Every country is at a different stage of a cycle. You have to know when to accelerate and when to brake."

Cragg boosted his Australia holdings to 13 percent last year, from 7.7 percent at the end of 2002. He snapped up miners, including Jubilee Mines NL, amid optimism that China's improving economy would increase demand for raw materials. Cragg also bought shippers in Taiwan, Hong Kong, Singapore and Malaysia.