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Little-Known Funds From Well-Known Managers

Their other funds have billions, but their newer portfolios have far less.

Gregg Wolper, 03/01/2011

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Creating a mutual fund is no guarantee of riches. It can be very tough to attract substantial levels of assets. The few new funds that have succeeded in attracting heavy inflows in recent years often have come from portfolio managers with names well-known to advisors. Typically they already run other funds with asset levels in the billions of dollars or have done so in the recent past.

One noteworthy recent success story is DoubleLine Total Return Bond DLTNX, managed by Jeffrey Gundlach and his team (formerly of TCW), which has gathered $4.5 billion in less than a year. Another is IVA Worldwide IVWAX, run by Charles de Vaulx and Chuck de Lardemelle, who established themselves at First Eagle. IVA Worldwide, launched in late 2008, had raked in well over $1 billion by mid-2009. It closed to new investors a week and a half ago with about $9 billion in its coffers.

As it turns out, though, at times even managers who run billions of dollars can't attract much money to new offerings. But some such funds are certainly worth a look.

Why have these funds struggled to gain attention in spite of an impressive pedigree? For the three offerings discussed below, one answer could be their category. Global-stock funds (also known as world-stock) face a headwind: the apparent preference of many U.S. investors to own separate offerings for domestic and international equities rather than one that buys stocks all over the globe. Still, some world-stock funds are huge, so clearly there's an audience willing to consider them.

Even investors who already own separate domestic and international could benefit from checking out these lesser-known choices. Given these managers' distinctive approaches, adding one of these funds may not lead to much overlap with existing holdings as long as you don't own one of the managers' other charges.

Artisan Global Value ARTGX
Managers David Samra and Daniel O'Keefe have put together an impressive record at the all-foreign Artisan International Value ARTKX. They won recognition as Morningstar International-Stock Manager of the Year for 2008 for their success at that fund. Artisan Global Value, which also owns U.S. stocks, came out at the end of December 2007. It's possible that the lack of a three-year record might have inhibited investors, for many people--especially advisors--like to see a fund pass that benchmark before buying. Now this fund has passed that measure. Its three-year return places in the top decile of the world-stock category.PAGEBREAK

It's true that Samra and O'Keefe have not previously run a fund with U.S. stocks, but they've looked closely at scores of American companies for years while comparing foreign companies to their competitors. The fund's all-cap nature partly explains why its return trounces those of most world-stock rivals, the bulk of which focus more on large caps (which lagged mid- and small caps during most of this period.) All told, though, it's hard to see why this fund should have less than $50 million in assets, while Artisan International Value has $3.3 billion.

Oakmark Global Select OAKWX
This fund features just 20 stocks, picked by Bill Nygren and David Herro of Harris Associates. Each has won recognition as Morningstar Manager of the Year, and in 2010 Herro was named International-Stock Manager of the Decade. Nygren's U.S.-focused Oakmark Select OAKLX has $2.7 billion in assets, while his Oakmark Fund OAKMX has $4 billion. Each lands in the top decile of the large-blend category for the 10-year period through Feb. 23, 2011. Meanwhile, Herro's Oakmark International OAKIX has nearly $8 billion under management and an equally lofty long-term record, and his Oakmark International Small Cap OAKEX has $1.6 billion.

Yet Oakmark Global Select, launched in 2006, has just $435 million in assets. That's much more than Artisan Global Value, but it's hardly a substantial figure in the mutual fund world and pales next to the money wrapped up in these highly esteemed managers' other funds. This fund had a rough time in 2007 but since then has outshone the competition.

It's possible that all the investors who embrace Harris Associates' unorthodox value approach already own funds from Nygren or Herro or both--or own the firm's older world-stock fund, which is run by different managers and has been quite successful in its own right (and has $2.5 billion in assets). Those who don't fall into those groups should give this fund a look.

Tweedy, Browne Worldwide High Dividend Yield Value TBHDX
Tweedy, Browne's value-oriented style is well-known to investors familiar with the $4.7 billion foreign-stock fund Tweedy, Browne Global Value TBGVX. The younger worldwide dividend fund not only invests around the world--as does another sibling, Tweedy, Browne Value TWEBX--but it is distinct in other ways from both of those siblings, with which it shares managers. Worldwide High Dividend Yield Value focuses more specifically on companies paying meaningful dividends. It can also be more willing to hold cash stakes, which helped gave it a better cushion in the 2007-09 bear market than nearly all rivals.

Both of Tweedy's world-stock funds could appeal to investors, but Worldwide High Dividend will be more attractive to those wary of the U.S. dollar's long-term prospects. Unlike Tweedy, Browne Value, which hedges most of its foreign-currency exposure into the U.S. dollar, this one is completely unhedged and thus will enjoy an extra boost in its returns if foreign currencies rise against the greenback. (It also has a higher allocation to foreign stocks.)

At the end of January 2010, Tweedy, Browne Worldwide High Dividend Yield Value had only $244 million in assets. Investors considering a world-stock fund should put it on their list.

Gregg Wolper is a senior mutual fund analyst with Morningstar.

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