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Five Nominees for International-Stock Manager of the Year

There are some well-known names and some less familiar.

Gregg Wolper, 12/19/2006

Earlier this month, we revealed our five nominees for 2006 Domestic-Stock Manager of the Year and explained why each one made the list. Here we'll follow suit with the five nominees for International-Stock Manager of the Year.

The previous column outlined the criteria involved in the selection process, so we won't restate all of it here. However, it's worth repeating the most important fact: While we require the nominees to be enjoying strong performance this year, our Manager of the Year honors are not a reward for just one year. Equally critical are the managers' long-term records and other factors such as a sound strategy and manager commitment toward the funds' shareholders.

The international list features fairly well-known names, including two former winners of the award, along with managers who are probably less familiar to readers. Three of the nominees were featured in August column that included a preliminary list of potential candidates. We should note that the managers who were cited in that column but who don't appear on this list didn't do anything wrong; we still consider them fine managers. For the record, a number of fine international managers didn't appear on either list this year. With so many worthy investors leading international funds these days, it's simply tough to make the final cut.

The combination of strong markets and strong currencies has propelled most international funds to high returns this year. Surprising as it might seem, a 20% gain isn't enough to land in the top half in any of the broad all-foreign categories.

With that background, here is the list of nominees for International-Stock Manager of the Year (in alphabetical order).

Hakan Castegren and Team
Harbor International
HAINX
Hakan Castegren won this award in 1996, and the fact that he appears on the list 10 years later means he fulfills one key criterion for consideration: a lengthy record of success. Although the fund has had some periods in which it has lagged its peers--most recently in 2004--Castegren hasn't lost his touch since winning the award a decade ago. This fund has the fourth-best 10-year record of the 34 foreign large-value funds that have been around that long.

In recent years, he has shared duties with a compact group of talented and very experienced analysts who know the portfolio inside and out and who are as strongly committed as Castegren to the fund's flexible-value style. Flexible in this sense doesn't mean the strategy changes with the winds; rather, it means that long before value managers started talking up Microsoft MSFT as a value play, this fund was buying up technology-related shares rarely found in value-oriented portfolios. This year, the fund is beating roughly 90% of its foreign large-value rivals with a 29.3% gain through Dec. 13 that also trounces the MSCI EAFE Index. Among other things, it was helped by a large stake in industrial-materials stocks. One other note: It's encouraging to see that this team has not been hampered by the rapid growth in the fund's asset base in recent years.

Hassan Elmasry and Team
Van Kampen Global Franchise
VGFAX
Hassan Elmasry and his team run an unusual world-stock offering. It owns just a small number of companies that meet strict standards: They must provide a product or service that's hard to replicate and must have sustainable earnings and low capital outlays. That approach often results in a portfolio with high concentrations in just a few sectors and nothing invested in entire regions. Currently, for example, it has about 60% of its assets in a diverse array of consumer-goods companies, ranging from tobacco and alcohol giants to Kimberly-Clark KMB and Unilever UL. It has no holdings in Japan--a substantial portion of most rival portfolios--or anywhere else in Asia.

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