Some emerging markets, particularly those in Asia, will be big beneficiaries from falling oil prices, suggests Russel Kinnel. Here, the editor of Morningstar FundInvestor looks at six funds poised to benefit.
That doesn’t ensure these markets won’t sell off in sympathy with Russia, but it should make them a rewarding place to invest over the longer-term, given that share prices have gotten cheap.
Matthews Asian Growth & Income (MACSX) is one of the best ways to bet on Asia. It’s cheap and well-run and managers Robert Horrocks and Kenneth Lowe are mindful of risk.
Buying convertible bonds, corporate bonds, and preferreds helps to take some of the extremes out of investing in Asia. Among common stocks, they look for solid dividend-payers rather than maximum growth.
Harding Loevner Emerging Markets (HLEMX) offers the whole suite of emerging-markets investing from a seasoned team based in New Jersey.
Management seeks high-quality companies with competitive advantages. From co-manager Rusty Johnson’s start date in 1998 through November 2014, the fund has generated a 13.1% annualized return compared with 9.8% for the peer group.
If the selloff in emerging-markets debt continues, Fidelity New Markets Income (FNMIX) could make a nice bet on a rebound. John Carlson is hitting his 20-year mark at the fund and he’s proven adept at sorting through the opportunities and hazards in emerging-markets debt. The fund has a cheap price tag to boot.
While the US has come back strong from the meltdown of 2008, Europe remains stuck in the mud. That and the aforementioned challenges in emerging markets explain why foreign funds have lagged US strategies.
That leads me to one value play and two growth funds. On the value front, Causeway International Value (CIVVX) continues to impress.
Sarah Ketterer and Harry Hartford have proved to be outstanding stock-pickers, but they are managing only $6 billion at this fund, which has a Morningstar Analyst Rating of Gold. Unlike most of its peers, though, the fund is barred from investing in emerging markets.
If Europe isn’t growing overall, then seek out those companies that are still growing. That’s Mark Yockey’s philosophy. At Artisan International (ARTIX), Yockey blends fast-growers with more-stable growth names to build a diverse portfolio.
Over 19 years, he’s doubled the category’s return without taking an extreme amount of risk. The fund isn’t as nimble as Causeway, though, as Yockey runs $28 billion in this strategy.
Small-cap foreign stock had a rough year, so naturally I’m intrigued to see what T. Rowe Price International Discovery (PRIDX) can do over the long haul. Justin Thompson has built a long and excellent record seeking out small-cap companies that produce high returns on investment.
The strategy is aggressive enough that you need to have some tolerance for pain (the fund lost 50% in 2008 and gained 55.7% in 2009), but it ought to reward those in it for the long haul.
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