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Foreign Fund Favorites
11/12/2004 12:00 am EST
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."
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