Guest Author - Guido Deboeck
In the first part we talked about the Best Domestic Jockeys in the investment race to produce higher returns. These are investment managers investing mainly in US stocks. In this follow up part we discuss the jockeys that invest mainly outside the US.
Morningstar as well as many other sources classify funds based on how portfolios are invested in foreign, regional or world markets. Those invested in foreign markets are those that invest in foreign markets at the exclusion of the US; the regional ones are those that invest in a particular region of the world (e.g. Europe, Asia, Latin America, Emerging markets). The funds classified under world markets are the ones who seek the best opportunities anywhere, US as well as non-US.
Following the same approach as described in The Best Jockeys, we extracted out of some 85 funds listed in FundInvestor of Morningstar, the best in terms of performance, low expense ratios and investment management. In this selection process we ignored any differences along the lines described above, meaning we considered all funds as one group. For the presentation of the results we show however the results in two groups because funds investing in a region have less degrees of freedom meaning they are more dependent on how the economies in their region are doing. For example, if stocks in the Pacific region are not performing as well, it is more diffucult for jockeys of Pacific funds to outperform those that can invest anywhere.
Ranked based on current year-to-date performance (YTD 4/30/2006) we consider the following the top “best overseas jockeys “ – the list below shows the top best by name, the name of their horse (symbol of the fund they are running), the YTD 2006 return, the 3 year average annual return, and the expense ratio--.
Group I: Foreign and World markets
1. Mark Yockey, ARTJX (& ARTIX), 22.9%, 45.7%, 1.57
2. Hakan Castegrin, HAINX, 20.6%, 35%, 0.86
3. David Herro, OAKIX, 16.5%, 32.8%, 1.49
4. James Anderson, VWIGX, 14.9%, 29.8%, 0.63
5. James Gendelman, HIIGX, 14.7%, 27.5%, 1.39
Group II: Regional markets
1. George Sauter, VEIEX, 19.5%, 45.7%, 0.48 (also VEURX & VGTSX)
2. Frederick Gautier, FIEUX, 15.7%, 40.9%, 1.05
3. Paul Matthews & Mark Headley, MAPTX, 13.2%, 41.4%, 1.48
These are not jockeys and horses to bet on because in order to bet on them you would need to know an awful more…. These are the ones currently leading the race in the foreign, regional and world markets against whom you may choose to be racing. They set the bar, the standard for what you may want to achieve in managing your portfolio.
Note that the average YTD of the top first group is 17.9%, compared to 14.3%, for the Vanguard Total International Stockmarket Index fund or 6.6% for the Morgan Stanley Composite World Index. The average three year annual return of the top best is 34%, compared to 23.4% for the Morgan Stanley Composite World Index.
The advantages of racing against these jockeys should be obvious: if your portfolio matches the average return of say the first group (17.9%) your capital doubles every four years; if you manage to match the three year annual average of this group (34%) your capital doubles every two years. Tough standards to meet, but what great rewards...
Now that you have read both parts of this series on The Best Jockeys you can ignore all monthly and quarterly reviews of the performance of mutual fund managers published regularly in newspapers and magazines. You know the races to run in (domestic or overseas), you know the best jockeys and fastest horses in each, and you know what the reward is for winning in these races!
