Fund Favorites

"Around the world, business and government leaders are working their buns off to compete better," notes Neil George, editor of Personal Finance. "One way we play these opportunities is through our collection of closed-end country funds, which allows us to put our money in improving economies driven by the leading local companies. We use these funds as proxies into many of these countries because their individual stocks are either thinly traded or the markets aren't easily accessible. We love Brazil Fund (BZF NYSE), Korea Fund (KF NYSE), and Central European and Russia Fund (CEE NYSE), as well as the newcomer to the Growth Portfolio, First Israel Fund (ISL NYSE). By buying into each of these, we get the best that these local markets offer."

"Fairholme Fund  (FAIRX) is a surprise; it is the first domestic fund to appear at the very top of the ranks in many months," says Janet Brown, editor of NoLoad Fund*X . "It further distinguishes itself from the rest of its peers with positive returns for each of the four performance periods we track. The managers seek undervalued companies and are willing to make large bets on individual companies and industries. The managers invest in a maximum of 25 stocks because they want to understand the companies they buy and want their picks to count. The top ten positions hold around 70% of the fund's assets and include Berkshire Hathaway with nearly 20% of fund assets and MCI, at 15% of assets. Another sizable position, cash, may also be helping Fairholme weather the latest market volatility."

"After getting crushed over the course of last year, everything about the pharmaceutical industry seemed ugly," notes Price Headley in BigTrends.com . "But over the last two months, we've seen more upside than downside, with the sector up a fraction since the end of 2004. That sheer relative strength is compelling, considering that the S&P is down 2.5% and the NASDAQ is down 8.5% over the same timeframe. Indeed, the AMEX Pharmaceutical Index has just crossed above the 200-day average, a sign that the 'bigger trend' is on the buying side of these deeply undervalued stocks. Clearly somebody is buying these stocks, and the recent technical strength is likely to trigger a lot more buying. We recommend Pharmaceutical HOLDRs Trust (PPH ASE), an exchange-traded fund. Our target is 89.25 with a closing stop at or under 72. This is a pure 'undervalued' strategy."