Nominees for 2015 International-Stock Fund Manager of the Year

In Monday's Fund Spy, we unveiled the nominees for Morningstar's Domestic-Stock Fund Manager of the Year. Below are the nominees for International-Stock Fund Manager of the Year. Columns discussing the nominees for other asset classes will follow this week and next, and the winners will be announced on Jan. 26.

These nominations reflect more than the managers' performance and portfolio decisions in 2015 alone; we're not trying to promote one-year wonders. Rather, we recognize managers who not only had strong results in 2015, but whose impressive one-year showing underscores the merits of their approach and their ability to deliver sound long-term performance. To be nominated, therefore, managers must have demonstrated success over time as well as in 2015 and must run a fund with a Morningstar Analyst Rating of Gold, Silver, or Bronze.

In evaluating candidates, we consider other funds that the managers run (when applicable), as well as their most prominent funds.

The 2015 investment environment was challenging for international-stock managers. Although European economies finally showed signs of life and some Continental stock markets posted solid gains in local-currency terms, growth rates in most European countries--and in other developed markets--remained modest. And outside of the yen and the Swiss franc, many foreign currencies suffered painful declines versus the U.S. dollar, substantially cutting fund returns for U.S.-based investors. Meanwhile, the continuing slowdown in China and multiple problems in Brazil rendered the emerging-markets terrain quite treacherous.

As a result, for the second-straight year, it was a challenge for international-stock funds even to eke out a positive return. Some managers, though, proved their mettle as they have done for many years before. Below are the three nominees for 2015 International-Stock Fund Manager of the Year.

Robert Lovelace and Team

American Funds New Perspective ANWPX

2015 Return: 5.3%

Morningstar Category Rank (Percentile): 7

This world-stock fund is run by seven named managers located in the United States, the United Kingdom, and Asia; until 40-year veteran Gregg Ireland retired in mid-2015, that number was eight. Two come from Capital Group subsidiary Capital International Investors, while the others work for another subsidiary, Capital World Investors. The CII and CWI managers communicate within their respective teams and with their respective analyst groups, but they don't share investment ideas across subsidiaries. That makes for a more diverse fund, as does the firm's practice of having each manager run a separate sleeve of the portfolio. Robert Lovelace, the longest-tenured manager, oversees CII's side and the fund as a whole, while Joanna Jonsson oversees CWI's side. Although Lovelace and Jonsson don't share investment ideas, they talk regularly to ensure that balance and diversification characterize each side's respective subportfolios and the entire fund.

Over the years, the fund has amassed an impressive record. Through the end of 2015, its three- and five-year rankings were in the 12th percentile of the world-stock Morningstar Category, and its 10-year return landed in the fourth percentile. The fund also comfortably topped the returns of the relevant indexes in those stretches. What's more, its Morningstar Risk rating was below average (indicating that it had milder-than-average volatility) for all three periods. That's a powerful combination.

In 2015, the fund demonstrated its relative resilience once again. In the third quarter, when the MSCI All Country World Index dropped 9.5%, this fund held its loss to 6.5%, which was an important factor in why it landed in the category's top decile for the year. Other reasons included very strong performance by the fund's two top holdings, Novo Nordisk and

George Evans and Robert Dunphy

Oppenheimer International Growth OIGYX

2015 Return: 3.4%

Morningstar Category Rank (Percentile): 23

George Evans has been running this foreign large-growth fund for nearly 20 years, while veteran analyst Robert Dunphy was promoted to comanager in 2012. The fund's performance has been stellar over time. In fact, for the trailing 10-year period through year-end 2015, its 6.5% return landed in the top percentile of the foreign large-growth category.

Evans has stuck to the same strategy throughout his tenure. He looks for stocks trading at prices justified by their expected earnings over the next three to five years and tends to stick with them; the fund's minuscule annual turnover rate of 12% for the past two years was just a bit lower than the fund's typical figure. He has reduced the chances of any individual problem derailing the portfolio by keeping position sizes small. Most recently, no stock received even 2% of assets.

Unlike the globally oriented American Funds New Perspective, which has more than 40% of its assets invested in the U.S. (and thus sheltered from 2015's currency headwinds), Oppenheimer International Growth is almost totally invested outside of the U.S. The fund's 3.4% return for 2015 might not seem impressive, but it was fully 9 percentage points higher than the MSCI ACWI ex USA Index. Lower-than-average weightings in the energy sector and in emerging markets helped out, as those were serious trouble spots for funds last year. Evans and Dunphy also had strong performance from their stock choices in the healthcare sector. Just as much, though, rather than big winners, it was an absence of losers among the top holdings that helped Evans and Dunphy provide a solid result in a tough year.

Rajeev Bhaman

Oppenheimer Global OPPAX

2015 Return: 3.9%

Morningstar Category Rank (Percentile): 10

It's uncommon for there to be two nominees for International-Stock Fund Manager of the Year from the same firm in the same year, but when both are highly deserving, it makes sense. Rajeev Bhaman has managed world-stock fund Oppenheimer Global for more than 10 years, and for eight years before that, he ran

Though he shares a growth-leaning approach with Evans, the two funds are anything but clones. Most obviously, this fund recently had about 45% of its assets in the U.S., while Oppenheimer International Growth has almost nothing there. Other country weightings differ as well; this fund is overweight in Japan, the opposite of Evans' position. A look at the two funds' top holdings shows very little overlap. But Bhaman does share the trait of patience with his colleague. This fund's annual turnover rate hasn't surpassed 15% for 10 years.

A marked overweighting in technology stocks helped Oppenheimer Global in 2015. That stake is no surprise; Bhaman has favored that sector for years. Also helpful in a year when commodity prices crashed: His near-avoidance of the energy sector. Some of the fund's best stock performers included Airbus and