Welcome, Fools, to part 35 of our several-thousand-part series, "Better Know a Stock Picker," which is loosely, but not too loosely, based on Stephen Colbert's "Better Know a District" from The Colbert Report.
Like Stephen and his thorough investigations into America's congressional districts, each week I take a look at a fund you may want to own. What's on tap this week?
|
T. Rowe Price Emerging Markets Stock (PRMSX) | |
|---|---|
|
Expense ratio |
1.25% |
|
Fund size |
$2.7 billion |
|
1-year return |
16.23% |
|
5-year return |
26.78% |
|
10-year return |
11.30% |
Top 5 holdings
|
Company |
% of Assets |
|---|---|
|
America Movil (NYSE:AMX) |
3.26% |
|
Petroleo Brasileiro (NYSE:PBR) |
2.55% |
|
Hon Hai Precision Industry |
1.98% |
|
Savings Bank of the Russian Federation |
1.84% |
|
Bco Itau Hldg. |
1.83% |
Meet Chris Alderson
The fightin' team at T. Rowe Price Emerging Markets Stock has been on board since day one in March of 1995 and is still led by Chris Alderson, who is now in his 20th year with the firm.
He's produced superstantial results in that time. For example, Emerging Markets Stock is up on the benchmark MSCI EAFE index by more than 3% annually over the past decade. Eat that, Wall Street.
Not that Alderson frequents lower Manhattan's lunch clubs or anything. More often, he's in the air, covering the world looking for great stocks. That's why no single region accounts for more than 50% of the fund's portfolio. (Though, as of January, holdings based in South Korea, Taiwan, Brazil, and Mexico together combined for half of assets.)
Alderson won't be confined to a style box, either. While Emerging Markets Stock has 38% of its assets in very large firms such as South Korea's Kookmin Bank (NYSE:KB) or Taiwan Semiconductor (NYSE:TSM), 24% of the portfolio is in more modest mid-cap issues. And 4% is in speculative small caps such as South Africa's Naspers (NASDAQ:NPSN), which offers pay TV and Internet service across the continent.
How he invests
But diversity -- the portfolio contains 132 stocks -- has its problems. How can anyone cover that many stocks, in that many countries, without going insane? Alderson defies the investapo by leaning on a team of three other managers, including Mark J.T. Edwards, who has also been with Emerging Markets Stock since day one, and a team of 12 researchers. Regions are divided among the staff.
Discipline, too, makes it easier to stay off the hamster wheel. According to a recent interview with SmartMoney, Alderson and his team allow their researchers to dig through the numbers to weed out firms that trade for unreasonably high valuations.
Bargains are simply more Alderson's style. Take Naspers, for example. Alderson recently told Fortune that the stock trades for just 13 times projected 2007 earnings, which are on pace to grow 25% to 30%. What do you think of that, growth huggers?
Is this fund for you?
Yet, for all that, Alderson doesn't strike me as the next Peter Lynch. Fortunately, he doesn't need to be. Emerging markets are prone to wide swings that can lead to giant gains or massive losses. For his part, Alderson has managed many gains and few losses.
Plus, the fund's 1.25% expense ratio, a steal for its category, is cheaper than a similar but now-closed winner from Shannon Zimmerman's Motley Fool Champion Funds portfolio. Accordingly, I won't be surprised if Shannon decides to tap Alderson for more market-beating gains. (Want unfettered access to all of Shannon's winners? Click here to get 30 days of free access to Champion Funds.)
And that's today's profile. See you back here next week, fund nation. Good night.
For more Foolish coverage of fund-toting globetrotters:
- Discovery comes naturally for William Kennedy.
- Asia is where it's at for G. Paul Matthews.
- Tag-team returns are just fine for investors in Dodge & Cox International Stock.
Think you can't beat the market with funds? Think again! The selections in Shannon Zimmerman's Motley Fool Champion Funds portfolio are up an average of 34% vs. just 21% for their comparable benchmarks. Ask us for an all-access pass to get an unfettered look at all of Shannon's picks, manager interviews, and model portfolios. Go ahead; it's free for 30 days and there's no obligation to subscribe. Dodge & Cox is a Champion Funds pick.
Fool contributor Tim Beyers, ranked 1,642 out of more than 22,600 in our Motley Fool CAPS investor intelligence database, is a regular viewer of The Colbert Report. (Stay the course.) Tim owns shares of Taiwan Semiconductor. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on mutual funds, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy is always championship-caliber.
