Ron Muhlenkamp, manager of the eponymous Muhlenkamp fund (MUHLX), is an independent and disciplined thinker. Over the past 15 years, his fund has returned 16% annualized -- five points per year ahead of the S&P 500.

In analyzing a stock, Muhlenkamp pays close attention to two numbers: its price-earnings ratio (he wants it to be below average) and return on equity, a measure of profitability (which he wants above average). Muhlenkamp invests in companies of all sizes, but lately the fund has tilted in the direction of larger firms because that is where Muhlenkamp is finding more stocks that meet his criteria.

International funds

Dodge & Cox is not your average fund company. Most of the managers and analysts who join the San Francisco-based, employee-owned company do so after business school and stay their entire careers. The seven co-managers of Dodge & Cox International Stock (DODFX) have been at the firm an average of 17 years. That continuity, plus the firm's penchant for successfully sniffing out cheap stocks, has helped make International a top performer since its launch in 2001.

International follows the same formula perfected by Dodge & Cox Stock, a venerable domestic fund that has long owned some foreign stocks (and is now closed to new investors). Both funds are team-managed, so that a variety of viewpoints are represented. Both charge low fees; International's annual expense ratio of 0.70% is less than half that of the typical international fund. And the management teams of both funds -- there's some overlap between the two -- are terrific value investors. Experience coupled with thorough research, says co-manager Diana Strandberg, "often gives us the confidence to keep buying more of a stock as it declines."

International's managers have lately been finding opportunities in drugs, media, technology and telecom -- areas that are normally the purview of growth-stock pickers. "We're finding lots of bargains in former growth darlings," Strandberg says. The fund has a fourth of its assets in Japan and 15% in emerging markets.

You need to have determination to take long bike rides several times a week, as David Herro does. Sometimes, he says, "you feel tired and you start wondering, What am I doing on this bike?" Lately, Herro, manager of Oakmark International (OAKIX), has been feeling that way about some of his stock picks.

Last year marked the first time since 1998 that Oakmark's total return trailed that of the average diversified overseas fund. The problem? Herro is a dogged value investor, so he sold most of his emerging-markets stocks too soon because they had become pricey, in his view. Herro also missed out on part of the big move in Japanese stocks because he has trouble finding Japanese companies "with managers who care about shareholders." Instead, he's loaded up on blue-chip media and drug companies, mostly based in Europe.

It's hard to argue with International's long-term results, however. The fund returned an annualized 12% over both the past five and ten years, putting it in the top 20% of broad-based foreign funds.

Marsico International Opportunities (MIOFX) has matched Oakmark International's gains over the past five years. But its manager, Jim Gendelman, arrived there via a different route. Like his mentor, Tom Marsico, Gendelman studies the economic picture before researching stocks. He's keen on emerging markets and has invested about 20% of the fund's assets in them. "Many of them have better underlying fundamentals than do developed economies," says Gendelman, who also runs Harbor International Growth (which has a slightly lower expense ratio). And because he thinks Japan's economy is finally on the mend, he has placed 16% of assets in Japanese shares.

Because of their volatility and periodic implosions, emerging-markets funds aren't for the faint of heart. Bolder investors, though, should consider SSgA Emerging Markets (SSEMX). Over the past five years, the fund ranked in the top third of emerging-markets funds, with an annualized return of 22%. Over ten years it gained an annualized 10% -- in the top 20% of the category.

The fund avoids making big bets on any sector or country, says Brad Aham, who leads the seven-person team of managers. Computer models rank the attractiveness of both stocks and developing nations. But the fund diverges only slightly from the country weightings in the major emerging-markets indexes. In any case, Aham likes what he sees in developing nations: "In a lot of emerging countries, the consumer is being liberated -- with access to credit cards, mortgages and car loans for the first time."

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