Three fund managers discuss investing abroad. By Andrew Tanzer, Senior Associate Editor July 6, 2006 The world is shrinking, the world is shrinking. That's the conclusion of three distinguished fund managers -- Rob Lyon of ICAP, Diana Strandberg of Dodge Cox and David Antonelli of MFS -- who discussed global investing at Morningstar's 2006 investment conference in Chicago last week. The distinction between domestic and foreign investment is blurring, concur the trio. But each manager approaches overseas investing differently. Lyon, president of ICAP, notes that the developing world is benefiting from better access to capital and dramatic improvements in skills and technology levels. One of his preferred strategies for investing in emerging markets is to buy shares of European multinationals with deep, colonial-era roots in Asia and Latin America. That led him to such stocks as BP, the energy colossus, and mining giant Rio Tinto. Lyon also likes old industrial enterprises, such as Siemens, that are being enlivened by high growth in emerging markets. He's also attracted to such global financial-services companies as UBS and Credit Suisse, which provide private-banking services to Asia's rapidly expanding ranks of the wealthy. Dodge Cox has a famously bottom-up investment orientation, which is what led the San Francisco-based fund family into foreign stocks in recent years: You can't understand Caterpillar unless you also study Japan's Komatsu, explains Strandberg, co-manager of Dodge Cox International. She says that many of the world's leading companies and best values -- both multinational and local outfits -- are domiciled overseas. Why ignore them? She predicts that masses of newly minted consumers in the developing world will be one of the key growth drivers in the world economy -- which attracts her to globally competitive giants such as Nestle and Nokia. Scared off of emerging markets by the recent volatility? Don't be, says MFS's Antonelli. He calls these markets "growth with the volume turned up," but he thinks investors "will be rewarded in a handsome way" for staying on the roller-coaster for five to ten years. Economic growth will remain relatively high in these populous nations, which also are benefiting from improving financial standards and reporting. Read more about the goings-on of the Morningstar conference in our Dispatches From Morningstar, Part 1, Part 2, Part 3 and Part 4.