The leaders are a mix of past winners and other terrific managers.
Here are the front-runners for the International-Stock Manager of the Year. As longtime readers know, we present these awards every January to managers who are seasoned as well as talented and who have delivered superior results regularly in the past as well as over the preceding 12 months. We also insist that the winners be from firms that are dedicated to treating the investors in their funds well.
With that in mind, we first screened for international funds with strong year-to-date and longer-term returns plus above-average or better Stewardship Grades. We then looked at the overall credentials of the managers and identified eight candidates who stand out. Four of these current favorites have been named International-Stock Manager of the Year in the past, while the other four front-runners, although highly--and rightly--respected, have yet to win the award. Here the details on the skippers in both groups.
Four Past Winners Who Might Repeat in 2007
The Team at American Funds EuroPacific Growth AEPGX
This team has continued to shine since being named the 1999 International-Stock Manager of the Year for its considerable success in the 1990s. Overseas markets have been all over the map during the first seven years of this decade, but the team has repeatedly produced good results. And team members, who operate independently and follow a variety of stock-selection strategies, have also found way more than their share of winners in this year's choppy conditions. As a result, this foreign large-blend fund boasts top-quintile three-, five-, and 10-year returns, and it has suffered relatively moderate volatility along the way.
The Team at Dodge & Cox International Stock DODFX
This team has a lot going for it. It follows a wide-ranging and slow-moving value strategy that has considerable inherent appeal, that has earned exceptional long-term results at the family's domestic-equity offering, and that limits transaction costs. And the team hasn't missed a beat since winning the 2004 award. It produced strong results in each of the next two calendar years by making a wide variety of good picks, and it has done the same thus far in 2007, so this foreign large-value fund's shorter-term and overall records are both exceptional.
Hakan Castegren of Harbor International HAINX
Castegren, who received the award in 1996, has used a slow-moving, blue-chip value strategy throughout his 20-year tenure. Although his willingness to delve into unpopular stocks and sectors has sometimes led to short-term underperformance, Castegren has generally executed his discipline deftly, as this foreign large-value fund's topnotch three-, five-, and 10-year gains attest. And he has once again put his patient approach to good use in 2007 by making several good picks in the materials and other industries, so the fund sports top-decile year-to-date returns.
The Trio at Thornburg International Value TGVAX
There are several factors in Bill Fries, Wendy Trevisani, and Lei Wang's favor. The three managers, who rely on an exceptionally wide-ranging strategy that makes the fund stand out from its foreign large-blend peers, have really come through in this year's on-again, off-again overseas rally. The fund has gained 20% and outpaced all but a few foreign large-cap offerings for the year to date, in fact, thanks to a diverse mix of excellent picks from the trio. Meanwhile, Fries, who won the award in 2003, consistently produced superior results with the same distinctive style while serving as the sole manager of the fund from its early-1998 inception through early 2006.PAGEBREAK
Four Other Talents
The Team at American Funds Capital World Growth & Income CWGIX
This team, which shares a few members with the team at EuroPacific Growth, relies on a conservative and effective strategy. The team members operate independently here as well, but they tend to favor undervalued dividend-paying blue chips and to be comfortable holding some cash. Not surprisingly, given its overall reserve, the team has succeeded in keeping volatility at this world-stock fund well below the category norm. The team's security selection has been quite good this year and in the past, so the fund has strong year-to-date, shorter-term, and long-term returns.
The Team at American Funds Smallcap World SMCWX
This team has several calling cards. Its independently functioning members focus on smaller firms with strong fundamentals and attractive prices, so the fund takes on less risk than most small-cap world-stock offerings and thus has suffered less volatility than most such offerings (although it has incurred somewhat more volatility than most mainstream funds in its category). And the team has put its stock-selection discipline to good use, particularly in recent years, so the fund's year-to-date, three-year, and five-year returns look quite good relative to smaller-cap as well as mainstream world-stock offerings.