A Seasoned Fund Manager
It's refreshing to hear the views of grizzled money managers, veterans who have invested money through innumerable market cycles. Jim Moffett, who has 35 years of investment-management experience under his belt, says today's situation reminds him of the early 1990s. "It took three to four years to work our way out of that economic mess," he recalls.
Moffett manages UMB Scout International (symbol UMBWX) from his perch in Kansas City, Mo. This unheralded fund has produced a fine long-term record investing in large foreign companies. Over the past ten years through June 30, Scout returned an annualized 9%, an average of three percentage points better than the MSCI EAFE index. That was good enough to land Scout in the top 10% of overseas funds that focus on large companies with a blend of growth and value attributes. Year-to-date through July 14, the fund lost 10.9%, placing it in the top 5% of its category.
Moffett, who has run the fund since 1993, looks for high-quality companies -- industry leaders with low debt and clean balance sheets. "We buy to hold, so I have to live with the stocks," he says. Moffett keeps his stocks for five years, on average.
He starts with a top-down view, studying geographies, sectors and the overall economic backdrop before picking stocks. He correctly anticipated a slower economy, so he has a relatively heavy allocation to health care (though not to big drug makers) and companies that make things that consumers use on a daily basis.
Diabetes is on the rise around the world, so he holds Denmark's Novo Nordisk (NVO), the world leader in insulin treatments. He also likes device makers, such as Fresenius Medical Care (FMS), a German maker of kidney-dialysis products; Switzerland's Nobel Biocare (NBHGF), the number-one supplier of dental implants; and Japan's Terumo (TRUMF), a leader in hospital supplies. Two of his favorite consumer holdings are Nestlé and Ambev, which controls half of Brazil's beer market.
In fact, Brazil is one of the few emerging markets in which Moffett is heavily invested. He's skeptical of the rule of law and protection of property rights in Russia and China, so he declines to invest directly in those countries.
Instead, he taps indirectly into growth in emerging markets by investing in such outfits as Technip (TKPPY), a French oil-services company; Sociedad Quimica Y Minera de Chile, a fertilizer miner; and LVMH Moet Hennessy Louis Vuitton (LVMUY), the French luxury-goods giant. Moffett believes emerging-country stock markets are generally overpriced and vulnerable to rising inflation.
It's brutal out there in the investment world these days. But this relatively low-volatility, no-load fund makes a fine core international holding. UMB Scout International's annual expenses run a fairly modest 0.97%.