Pear Tree Polaris Foreign Value’s goal is to beat foreign stocks by two percentage points a year. Thinkstock By Ryan Ermey, Associate Editor From Kiplinger's Personal Finance, July 2015 Like most funds that don’t hedge against currency swings, Pear Tree Polaris Foreign Value (QFVOX) has delivered mediocre results lately. But its long-term record rocks. Over the past 15 years, it earned 8.6% annualized, more than double the gain of the foreign-stock MSCI EAFE index and, surprisingly, nearly twice the return of U.S. stocks.See Also: 9 Ways to Boost Your Investment Income Manager Bernie Horn and his team scour the globe in search of cheap foreign stocks. Starting with a universe of 39,000 names, they screen for firms that generate robust cash flow—money that can ultimately be used to pay dividends and invest for growth. They then narrow the field to stocks that they think will return at least 9% annualized over three to five years, or an average of two percentage points per year more than the EAFE index. Only about 10% of the stocks that pass the screen make the final cut. Horn prefers firms that consistently cut their costs and provide goods and services that save customers money. These are the marks, he says, of efficiency, a trait necessary for succeeding in a competitive global economy. Two negatives: With annual fees of 1.54%, Polaris is pricey. And results can be erratic, as Polaris tends to beat its benchmark in strong markets and lag it in weak ones. For example, when the EAFE plunged 43.4% in 2008, Polaris lost 52.4%. Among the fund’s big holdings at last report were Deutsche Telekom and Israel’s Teva Pharmaceutical. @Rankings exclude share classes of this fund with different fee structures or higher minimum initial investments. **Closed to new investors. †For all share classes combined. rMaximum redemption fee. MSCI EAFE index consists of developed foreign stock markets. Sources: Morningstar Inc., Vanguard.