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Three Up-and-Coming International-Stock Managers

Check out these rising talents.

William Samuel Rocco, 01/30/2007

Investors who are looking for talented international managers have a plethora of terrific and well-known choices. Our 2006 International-Stock Manager of the Year, David Herro of Oakmark International OAKIX and Oakmark International Small Cap OAKEX, is a first-rate option, of course, as are Rob Lyon and Jerry Senser of Mainstay ICAP International ICEUX, the team at Dodge & Cox International DODFX, and other past winners.

Many other veteran international managers command attention for their records, such as Bernard Horn of Polaris Global Value PGVFX and Quantitative Foreign Value QFVOX, and Hassan Elmasry and his team at Van Kampen Global Franchise VGFAX, who were nominees for our manager of the year award in 2006. But most investors have likely already heard of them due to their long histories of success.

Not all of the talented international managers are household names though. In fact, we've identified three with proven skills and sound strategies who haven't received very much recognition thus far--probably because their tenures are still fairly short--but who certainly deserve to be noticed: Rajiv Jain at Phoenix Foreign Opportunities JVIAX, Ray Mills at T. Rowe Price International Growth & Income TRIGX, and Oliver Kratz at DWS Global Thematic SGQAX. Here are the details on each.

Rajiv Jain
Jain has certainly delivered the goods since taking the helm of Phoenix Foreign Opportunities in early 2002. His fund, which straddles the border between the foreign large-blend and the foreign large-growth categories, has posted an impressive 19.5% annualized gain and outpaced all but a handful of foreign large-blend funds and all but one foreign large-growth offering over the past five years. And though this outperformance owes partly to Jain's taste for emerging-markets issues, it also has a lot to do with his stock selection. Jain runs a distinctive portfolio of just 45 to 50 names, and he had made a lot of excellent picks in the developed markets over the years, as well as a number of strong choices in emerging markets. Our confidence about the long-term performance Jain will deliver is bolstered by the fact that he is a value-conscious growth manager and his fund has relatively low expenses.

Ray Mills
Mills has distinguished himself during his five-year tenure at T. Rowe Price International Growth & Income. He guided this foreign-large value offering to relatively moderate losses when international stocks sold off in 2002 and also pretty good gains as overseas issues rallied from 2003 through 2006. Mills has also done a nice job of limiting volatility, and he has produced these attractive results with a patient, price-conscious approach that combines quantitative screens, top-down analysis, and fundamental research, which should have broad appeal. The considerable support Mills has at T. Rowe Price and the low expense ratio of his fund are additional pluses.

Oliver Kratz
Kratz has used an atypical approach to shine at DWS Global Thematic. Kratz, who took charge of this world-stock offering in late 2003, builds his portfolio based on a variety of broad themes, but he tends to go his own way rather than simply chase the current fads like many managers who follow such strategies often do. He also pays more attention to valuations and other fundamentals than most managers who rely on top-down-oriented strategies. Kratz has executed his strategy--which normally results in a portfolio that's indeed distinctive but not too trendy--quite well so far. His fund, in fact, boasts the best three-year returns of any world-stock offering. And the fact that DWS recently resolved its stewardship issues means that we're now willing to judge the funds in that family on their individual merits.

William Samuel Rocco is a senior analyst with Morningstar.

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