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Nominees for International-Stock Fund Manager of the Year

This year's list contains the 1998 and 2008 winners of the award. 

Gregg Wolper, 12/14/2012

In Thursday's column, the nominees for Morningstar's Domestic-Stock Fund Manager of the Year were unveiled. Next up are the nominees for International-Stock Fund Manager of the Year.

As with the awards for the other fund areas, these nominations not only reflect performance and portfolio decisions in 2012 but also consider long-term records. We want to reward managers who not only had topnotch returns this year, but who have demonstrated their abilities over time as well. In addition, we considered not just the managers' largest fund but others that they run too, when applicable. 

The Fixed-Income Fund Manager of the Year nominees will be posted on Monday, Dec. 17, followed by the Alternatives and Allocation categories on Tuesday, Dec. 18, and Wednesday, Dec. 19, respectively. All of the winners will be announced in the first week of January.

There are four nominees for 2012 International-Stock Fund Manager of the Year. In alphabetical order, they are:

George Evans of Oppenheimer International Growth OIGAX
Year-to-Date Return Through Dec. 12, 2012: 20.3%
Category Rank (Percentile): 15

Evans looks for companies with promising five-year growth prospects and tends to hang onto them: The fund's annual turnover rate is typically around 20%. He's willing to buy plenty of small- and mid-cap companies along with the big ones, and that flexibility has helped the fund over the years. In 2012, the fund has benefited from the huge gains posted by a diverse group of picks, including Europe-based giants such as SAP SAPDiageo DEO, Inditex, and Roche RHHBY, as well as lesser-known companies such as United Kingdom industrial firm Bunzl and Spain-based medical-products company Grifols. These stocks also outperformed during 2011's downturn, helping the fund land in the top quartile that year.

Evans usually has the bulk of the fund invested in the industrials, technology, consumer, and health-care sectors, and that can hold it back in rallies driven by financials and commodity-related fare. But his patient process paired with strong stock-picking have delivered over the long haul. Since its March 1996 inception, the fund has outpaced its typical rival and the MSCI EAFE Index by healthy margins.

Rajiv Jain, Virtus Foreign Opportunities JVIAX (YTD return: 21.1%; rank: 8)
and Virtus Emerging Markets Opp. HEMZX (YTD return: 19.2%; rank: 18)

Jain, who works for subadvisor Vontobel Asset Management, is an unconventional manager whose portfolios don't look much like those of indexes or his peers. Although he favors growth companies, and his funds' portfolios lie deep in the large-growth corner of the Morningstar Style Box, he tries to take a careful approach to this strategy. He wants steady growers with dominant positions in their fields rather than the most rapid growers, for example. He also wants to see straightforward, understandable business plans. He has found many of his picks in the tobacco and food-and-beverage industries, and his weighting in India has been much higher than average. By contrast, he's been very light in Japan and China.

In 2012, Jain's funds have benefited from an absence of stocks suffering significant losses (outside of a few mining companies) as much as the presence of big winners. Certainly, investor preference for defensive types of companies helped the funds' returns for much of this year, given Jain's giant consumer-goods stakes, but his addition of some exposure to European banks also paid off later in the year. More important, these funds also have outperformed in other environments. They do lag, though, when investors are more willing to accept risk and to own less financially stable companies.

David Samra and Daniel O'Keefe,
Artisan International Value ARTKX (YTD return: 21.6%; rank: 5)
and Artisan Global Value ARTGX
(YTD return: 18.5%; rank: 22)
This duo won Morningstar's International-Stock Fund Manager of the Year award for 2008, when their cautious value approach held these funds' losses far below those of all but a few rivals. Samra and O'Keefe once worked as analysts at Harris Associates, advisor to the Oakmark funds, where they supported Oakmark International OAKIX manager David Herro (who won this award himself in 2006). They started their International Value fund in September 2002, so it now has a 10-year record--which is outstanding. (Global Value launched in December 2007.)

Rather than hitting the jackpot with a few noteworthy stocks, Samra and O'Keefe have succeeded in 2012 by having many modest winners from diverse areas. Some of the biggest gains in their rather compact portfolios came from Diageo and HeidelbergCement HEI. Oracle ORCL and MasterCard MA from the United States also delivered nice returns for Global Value. Turnover in both funds is low. (Diageo and another top holding, Unilever UL, have been in the International Value portfolio since 2003.)

Artisan International Value is currently closed to new investors, but Artisan Global Value is open.

(Disclosure: O'Keefe was a fund analyst at Morningstar for several years in the 1990s.)

Mark Yockey, Artisan International ARTIX (YTD return: 23.9%; rank: 4)
and
Artisan International Small Cap ARTJX (YTD return: 31.3%; rank: 2)
Yockey is another prior winner of the International-Stock Fund Manager of the Year award, having won it in what seems like another era: 1998. Unlike Samra and O'Keefe--whose operation is completely separate--he uses a growth-oriented approach. So it's not surprising that he won this award in the late 1990s when growth was king. But Yockey's growth style is moderate, and Artisan International's portfolio tends to straddle the border between growth and blend in Morningstar's Style Box.

As a result, Yockey doesn't need a growth-dominated climate, or even a rally, to outperform. Impressively, Artisan International is not only in the 4th percentile of its category in 2012 with foreign markets rising, but it hit the 3rd percentile in 2011 when the MSCI EAFE Index finished deep in negative territory.

These funds aren't tame. Both of Yockey's offerings lagged in 2010 when some missteps in European financials tripped up returns, and unlike the Samra and O'Keefe offerings, neither of Yockey's funds held up any better than their peers in 2008's crash. But over time, and particularly in 2012, Yockey's decisions have paid off. 

Gregg Wolper is an editorial director and senior mutual-fund analyst at Morningstar.

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