Taking Flight with Eagle
02/25/2005 12:00 am EST
As an expert in asset allocation and global diversification, Eric Roseman looks for investments that will perform well in both up and down market environments. Here, he looks at his favorite global fund, one which has not had a down year in the past 15.
"I’ve devoted my career to trying to isolate products both in the US and overseas that can make money in all markets.Today, my feeling is that the bear market in equities has not ended. It’s hard to find value. Yes, the market’s internals are still strong. But it’s just not cheap. You don’t get paid to buy stocks today. And at the same time, there is too much risk. Thus, in my opinion, the general market has very little to offer. So while you can still invest in stocks, I urge people to also allocate their assets to protect—and even make money— when the stock market does go down again. I’m not saying to sell all your stocks and run for the hills. No. Hold your equity investments. But at least buy other products to offset potential losses.
"If you had all of your assets in equities going into 2000, you know how painful that can be. You don’t want everything in stocks. You have to have a blend. We focus on mutual funds that use a value investing philosophy. I like managers that essentially isolate cheap companies with good cash flow, usually brand name products, with strong balance sheets, and earnings. But most importantly, they either sell for book value, have a low p/e ratio, and typically pay a dividend yield. And you can find that, even in today’s market. So value managers for me are key.
"First Eagle Global Fund (SGENX) is without a doubt the best performing risk-adjusted global fund on this planet since 1979. One important development is that manager Jean-Marie Eveillard retired last December. Now, his apprentice for the last decade, Charles de Vaulx, is taking over. I believe we won’t see any major changes, as de Vaulx has been managing most of the portfolio for the last five years. The fund’s assets are about 78% in stocks, with the rest in bonds, gold stocks, emerging market debt, currencies etc. This fund should be in every single portfolio, regardless of your age. This guy is my number one position in all of my accounts, at 15% of assets. Shame on you if you’re a global investor and you don’t buy this fund. It is a phenomenal product that hasn’t had a losing year in 15 years. That should be your anchor for your global investments, your first top for all global investors— end of story."