Any mutual fund investor worth his salt knows that exposure to foreign companies is crucial for any investment portfolio. The hard part is finding a decent international fund manager with a great performance track record. Fortunately for investors, there are a few of these diamonds in the rough, including some that aren't among the big name fund shops.

A great foreign find
The UMB Scout International Fund (UMBWX) is one such fund. It's run by longtime lead manager James Moffett, who was a runner-up for Morningstar's International Manager of the Year in 2005. Moffett, who has been at the helm since this fund's 1993 inception, is assisted by co-managers Michael Fogarty, Gary Anderson, and Michael Stack. UMB Scout International looks for larger foreign companies that have established strong positions in their respective industries and that are trading at reasonable valuations. Right now Moffett and his team are favoring companies such as ABB Limited (NYSE:ABB), Canon (NYSE:CAJ), Allianz (NYSE:AZ), and Luxottica Group (NYSE:LUX).

The fund employs a very low-turnover strategy, which means that many of the names in the portfolio have been there for years. Annual turnover clocks in at 18%, far below the category average. UMB Scout International can invest in both developed and emerging market countries, and currently has a 10% exposure to emerging market countries such as Brazil, Hungary, and Israel. The United Kingdom and Japan make up the fund's largest country allocations, at 14% and 13%, respectively. The fund has tended to hold large amounts of cash, especially during the bear market years of 2000-2002, but has since reduced that cash stake to a more reasonable level.

Performance picture
UMB Scout International has been a steady and consistent performer. If you are looking for off-the-charts performance, you won't find it here, but neither will you find many weak spots. While the fund lost money during the most recent bear market, it came out ahead of its MSCI EAFE benchmark and most of its peers by a wide margin during those years. The fund has ranked in the top 25% of its foreign peer group eight times since 1993 and has fallen in the top half in all but two of those years. The fund's 10-year annualized return of 10.9% through August 2007 places it among the top 6% of foreign large blend funds in the Morningstar database.

In recent months, the fund has been helped by strong performance from the industrials and materials sectors. Holdings in Canada, Brazil, Italy, and Hungary have also posted strong gains in 2007, further boosting the fund's returns. The fund is currently underweight in the financials, consumer discretionary, and utilities sectors as a result of the team's top-down macroeconomic analysis.

Moffett is somewhat defensive on the global economy, and believes it to be slowing down. As a result, he has cut back on the fund's emerging markets exposure and has increased the fund's allocation to consumer staples and health-care stocks, areas that have traditionally performed well in a slower economic environment.

A piece of your portfolio
UMB Scout International would make an excellent core international holding for any mutual fund investor. The fund combines both growth and value attributes and includes developing countries in its portfolio, so it serves as a one-stop shop for international investing. The fund has held up well in downturns, and does not take on any outlandish sector or country bets. Expenses here are very reasonable for a foreign fund, and the asset base is still at a very manageable level.

Of course, if lead portfolio manager James Moffett were to retire or leave UMB, investors might want to rethink their ownership of the fund. But for now, UMB Scout International remains an excellent choice for any investor looking for a top-notch international stock fund.

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Fool contributor Amanda Kish lives in Rochester, N.Y., and does not own shares of any of the companies or funds mentioned herein. The Fool has a disclosure policy.