Our Finalists for International Manager of the Year

In recent days, we've announced our list of finalists for Domestic and Fixed-Income Managers of the Year. So, to wrap it up, we'll use today's Fund Spy to introduce you to the nominees for 2005 Morningstar International-Stock Manager of the Year.

As we've pointed out before, while we certainly seek to recognize managers who've had an outstanding year, we're also looking for those who've built solid long-term results. Simply put, one year of shooting out the lights won't cut it. We also consider the stewardship of the fund and favor managers who have tried to do right by their shareholders.

As always, we looked at a range of managers, and some notable ones didn't make the final cut. However, we would be remiss to not recognize the fine year that  Harbor International's (HAINX) Hakan Castegran (a former winner of this award),  Fidelity Diversified International's (FDIVX) Bill Bower, and T. Rowe Price's emerging-markets team have enjoyed. That said, the three top vote getters--all longtime Morningstar favorites--in the initial round of analyst voting are as follows:

Rob Lyon, Matt Pickering, and Jerrold Senser
 ICAP International (ICEUX)
No, you aren't suffering from double vision. The team at ICAP is indeed also among the finalists for our Domestic-Stock Manager of the Year. In fact, the same macro overlay that's buoyed the firm's domestic portfolios in recent years has worked equally well overseas. That said, this fund's performance is a little tougher to evaluate because it was a Europe-only fund until earlier in 2005. But it thrived versus that peer group and has done equally well in its still-short time in the foreign large-value category. For the year to date through Dec. 19, 2005, it was up more than 19%, having outpaced 95% of its rivals. And that's with minimal exposure to red-hot emerging markets.

James Moffett
 UMB Scout WorldWide 
The next time you hear someone tell you that it takes a massive team and a boatload of resources to run an international fund, point them to Jim Moffett (or Hakan Castegran, for that matter). Moffett, who has run this offering out of Kansas City since 1993, has worked with just a tiny number of international analysts at UMB--assistant managers Gary Anderson and Michael Fogarty are about the extent of it right now--along with a small domestic-stock analyst group. Moffett doesn't try to get cute. He builds a portfolio of mid- to large-cap stocks--often ADRs he can simply buy on U.S. exchanges--and owns them for the long run, typically hanging on to a stock for five years. Over the years, he's also built a strong record of identifying themes and individual stock stories ahead of peers, which has ultimately propelled returns. This year is another case in point, with the fund having jumped more than 18.5% for the year to date, putting it ahead of 89% of its peers. Meanwhile over the past decade, Moffett has beaten more than 95% of his rivals.

Rob Gensler
 T. Rowe Price Global Stock (PRGSX)
Our longshot in the field, it might surprise some to see Rob Gensler on this list given that he's been running this fund for less than a year. However, during that time, Gensler has handily outpaced his peers and turned around this long-dormant fund. More importantly, Gensler has an impressive record managing  T. Rowe Price Global Technology (PRGTX) and  T. Rowe Price Media & Telecommunications (PRMTX), which have substantial foreign stakes. He's also well-respected within T. Rowe and is likely to have an increasing impact on the direction of the firm's international research.

Plain Talk?
A recent filing for  Vanguard Windor II (VWNFX) states in very general terms that the management fee schedules for two subadvisors, Barrow, Hanley and Equinox, have been adjusted. However, the filing no longer specifies the breakpoints, and it appears Vanguard won't be providing detailed information about breakpoints--or performance-fee adjustments--in its Statements of Additional Information going forward. The move comes after a few of Vanguard's subadvisors had been able to negotiate raises in the past year.

We're dismayed by the move, especially because it comes in an area where Vanguard ostensibly has an advantage. While the firm may argue that some advisors want to keep fee arrangements out of the public domain, I have a hard time buying the argument given Vanguard's unparalled heft. Add in the firm's recent resistance to other disclosure initiatives, and the picture becomes somewhat bothersome.

We say a lot of nice things about Vanguard because it generally does right by shareholders. However, we don't agree with the motives behind this move. Plain talk, it is not.