Here we look at a four advisors who are recommending foreign stock funds. Doug Fabian looks to Europe, Jim Lowell opts for Europe and Japan, Leonard Goodall offers his favorite funds for Europe and Asia, and Walter Frank picks three international value plays.
(For more information on the advisors cited below, please click on their photos.)
"We are taking a position in Rydex Large-Cap Europe (RYEUX), which seeks to mirror the performance of the
Dow Jones STOXX 50 Index and provides a blue-chip representation of the market
sector leaders in Europe," says Doug Fabian, in his exclusive VIP
Investor . "The fund's largest allocations are the UK (39.55%), Switzerland (13.95%), Germany (11.41%),
and France (10.68%). Its largest sector holdings are in financials, energy, healthcare, and
telecom. Our move into a foreign fund is based on the US dollar and the double-digit
downtrend it's been on for 18 months. While a gradual descent in the
dollar is basically good for the country, a plummet is not.
The best profit opportunities from a weak dollar come on the international
front."
"Fidelity International Discovery (FIGRX) looks promising for the first time in four
years," notes Jim Lowell, editor of The Fidelity
Investor. "Formerly called International Growth & Income, the fund
has dropped income as an objective. Its focus will now be squarely on the
equity markets of established international markets of Europe, Japan, and certain
emerging markets. For the first time in years, now is a good time to return
to the large-cap camps of Europe and Japan. The funds new manager is Bill
Kennedy. And while new to this fund, Kennedy ranks fourth out of 14
international managers at Fidelity on our ranking system. He has put together a
solid record of performance over the past six years at the Pacific Basin and
Advisor Japan funds, which were volatile testing grounds. I like managers who
offer both a good defense and a good offense, and Kennedy does."
"We believe most investors should have some foreign holdings in
their portfolio," says Leonard Goodall in No-Load
Portfolios. "Vanguard European Index Fund (VEURX) has
two of the characteristics for which Vanguard is best known-
indexing and low
expenses. George Sauter, Vanguard's long-time indexing guru, is manager of the
fund. Its current investments emphasize the UK, France, German, Switzerland, and
the Netherlands. Its largest holdings are BP, HSBC, Vodaphone, GlaxoSmithkline,
and Total. If you want to own just one core holding in Europe, this is a good
choice for your portfolio. T. Rowe Price New Asia Fund (PRASX) is one of the older,
well-established Asia funds. Both of its managers have been with the fund since
1996. Its investments are mainly in South Korea, Taiwan, Hong Kong, India, and
Malaysia. Its largest holdings are Samsung Electronics, Taiwan Semiconductor,
Kookmin Bank, Cathay Financial and United Overseas Bank. Its annual expense
ratio of 1.17 is reasonable for Asia funds. This is worth considering for
investors who want to own just one Asia fund."
"We've added three international funds to our model portfolios,"
says Walter Frank, editor of
MONEYLETTER. "Dodge & Cox International
(DODFX ) is invested with a value discipline and
a long run view, focused on firms that are temporarily undervalued but
have favorable outlooks for long term growth. Recently, the managers have found attractive opportunities in South Korea,
Brazil, and Mexico. The fund ranks in the top 1% of its Morningstar category
for the trailing one- and three-year periods. Fidelity International Small
Cap (FISMX) is up 11.9% this year, enough to place it in the top 35%
of its category. Manager Ben Paton, who joined the fund at the start of
2004 concentrates on European stocks, looking for companies that may appear
unattractive at first glance, but actually have solid business fundamentals. The
largest portion of assets is now in Japan, followed by the UK, Australia, and
Germany. Vanguard International Value (VTRIX ) can invest in any market-cap range, and in
developed and emerging markets; the fund now has 15% of assets in emerging
markets. The fund uses a value strategy, searching not only for stocks that are
cheap, but also ones with a catalyst for price appreciation. By country, France
is most heavily represented, at 15% of assets, followed by Japan and Germany."
