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Don't Count Out These Emerging-Markets Skippers

This trio has more experience than it appears.

Gregg Wolper, 12/08/2010

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One of the key factors in evaluating a fund is the experience and tenure of the manager. If you are going to put a substantial amount of money into a fund, you want to entrust it to someone who has run that fund for a long time (successfully, of course) rather than a newbie with no track record.

That's especially important in a volatile field such as emerging markets, where knowing the landscape can be particularly difficult and having relevant experience can be especially valuable.

Sometimes, though, what might appear to be a rookie is actually a manager with plenty of experience. So it's worth taking a further look, even if the headline number shows that the manager's tenure on the fund is meager. Below are three emerging-markets stock funds whose manager-tenure figures on their current fund are not particularly long, but whose records in fact go back much longer. It's worth getting to know them; so if you are looking for an emerging-markets fund, these choices won't be eliminated automatically by a simple screen on manager tenure.

T. Rowe Price Emerging Markets Stock PRMSX
The former manager at this fund, Chris Alderson, was regarded highly not only by Morningstar fund analysts, and apparently the higher-ups at T. Rowe Price agreed: In March 2009, he was promoted to the position of president of T. Rowe Price International, giving up the reins of this fund in the process. It would be easy to cross this fund off the list as a result.

However, that would be too hasty. Gonzalo Pangaro became a comanager in autumn 2008 in order to provide a smooth transition from Alderson. Long before that, Pangaro, who's been with T. Rowe since 1995, was a Latin America analyst and then manager of T. Rowe Price Latin America PRLAX for the better part of eight years, racking up a strong record in the process. During that time, he played a substantial role in making the Latin American picks for T. Rowe Price Emerging Markets Stock.

Of course, there's more to emerging markets than Latin America. But Pangaro also oversaw the overall international-equity research effort at T. Rowe for a short time and will continue to have access to the managers of T. Rowe's regional emerging-markets funds.PAGEBREAK

In short, his years serving as a manager and an analyst in this area means that his tenure on this particular fund--just two years at this point--understates his actual experience. It's worth noting, too, that he is using the same style as his predecessors; so the fund's long-term history, which is reasonably impressive, is of more relevance than if a new manager with a new style had arrived from outside.

Oppenheimer Developing Markets ODMAX
Justin Leverenz has been manager of this fund for three and a half years, which might not be long enough in many investors' minds to qualify for their screens, even though the fund has crushed the competition during his tenure. But as with Pangaro, Leverenz is using the same style as his predecessors--Mark Madden and Rajeev Bhaman, who put up strong results here--and he also served as an analyst for Oppenheimer Global OPPAX for three years. In that role, he focused primarily on Asian companies and was working for Bhaman, who prior to taking over there had run this fund for eight years. Thus, even though that fund was a global offering, it was a prime location for an analyst to gain valuable emerging-markets knowledge.

Before arriving at Oppenheimer, Leverenz had researched Asian stocks as an analyst at Goldman Sachs and other firms. His familiarity with emerging-markets companies perhaps helps explain why he feels comfortable deviating so much from the benchmark in constructing this portfolio. This fund is no index-hugger.

That said, unlike Pangaro, Leverenz can't point investors to a prior record at a public mutual fund to bolster the confidence instilled from his record since taking over Oppenheimer Developing Markets. But he has more credentials than his 3.5-year record alone, providing a feeling that this solid start is not a fluke.

TCW Emerging Markets Equities TGMIX
Mark Madden, mentioned above as one of Oppenheimer Developing Markets' fine managers, has ended up here. The fund only started at the end of 2009, so his tenure shows up as just one year, as does that of comanager David Robbins. But Madden is in fact one of the more experienced emerging-markets managers around and has an extensive record at publicly available mutual funds. However, because he has attained that experience at other funds, it is not evident by simply looking at his tenure at TCW Emerging Markets Equities.

Madden ran Pioneer Emerging Markets PEMFX for 10 years, from 1994 to 2004, and during that time he made that fund one of the most attractive choices in the field. He then went to Oppenheimer Developing Markets, achieving somewhat less impressive results in three years there, and then started his own private firm before returning to the mutual fund world at TCW. This fairly long and impressive track record is all the more important in evaluating this fund now, for it has lagged badly in its first year of existence, partly owing to country weightings. Without Madden's history, there would be little reason to even spend a second considering this fund. Knowing his background, there's reason to investigate further.

Gregg Wolper is a senior mutual fund analyst with Morningstar.

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