3 / 5 Stars
4 4 3 4 5
Zacks Investment Research
Standard & Poor's
3 / 5 Stars
#24 in Foreign Large Growth
U.S. News evaluated 79 Foreign Large Growth Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 17.78 percent over the past year, 6.97 percent over the past three years, 12.85 percent over the past five years, and 9.37 percent over the past decade.
|Trailing Returns||Updated 10.31.2013|
|Year to date||10.7%|
|3 Years (Annualized)||7.0%|
|5 Years (Annualized)||12.8%|
|10 Years (Annualized)||9.4%|
Foreign growth funds hold an exotic appeal for many investors. The thought of your fund manager jetting off to foreign cities you can’t pronounce in order to research a company you’ve never heard of signifies the very essence of global commerce.
And then there’s the Scout International Fund. During his 17-year stint as lead manager, Jim Moffett has produced some of the best returns in the category by holing up in his Kansas City, Mo., office and reading less-fashionable Wall Street reports and country-by-country economic forecasts.
As of November 05, 2013, the fund has assets totaling almost $10.11 billion invested in 106 different holdings. The fund’s all-stock portfolio consists of roughly equal positions in more than 80 foreign large- and mega-cap firms, largely from developed nations, with several U.S. stocks thrown into the mix.
Moffett sees quality as his fund’s main asset. “We’re buying stocks—we’re not renting them. So we pay more attention to quality,” Moffett suggests. “That’s one of the characteristics that comes through in 2008,” when the fund ranked sixth in returns among foreign growth funds, despite the market collapse.
While he holds a particular affinity for large tech stocks like Germany’s Siemens and India’s Infosys Technologies, Moffett’s loyalty to GARP (growth at the right price) investing has lead him to make large financial institutions, which make up six of of the fund’s top ten holdings as of June 30, 2010, his current obsession.
Not that Moffett has any real obsessions. He sticks to mature companies and economies for the long haul, a habit that helps him single out cheap stalwarts in the near term like Swedish retailer H&M—which notched a 20 percent gain in the first two quarters of 2010. Moffett says, unlike its reputation for high taxes, Sweden’s high tax rate affects individuals, which leaves ample room for a business like H&M to grow. The fund added to every single one of its top 25 positions in the second quarter, a sign that Moffett seeing global economic growth picking up. The fund has returned 17.78 percent over the past year and 6.97 percent over the past three years.
The fund has beat the MSCI EAFE by an annualized 4 percent over the past 15 years by following a top-down approach to stock picking. Moffett seeks economies that are growing first and then looks for cheap companies with steady growth. For instance, the fund is currently underweight in Japan and the United Kingdom compared with the global index, because Moffett and his associates dislike the demographics in the former and the complacence of the latter.
“I like countries that make things,” Moffett said, explaining why countries like Germany, Finland, and Sweden get his special attention.
But another forgotten aspect of his strategy is where he refuses to invest. “Not in Russia and China,” says Moffett. “[In China, the issue] is basically the state-run planned economy, lack of rule of law and contract rights and property rights … [The government of] Russia is a bunch of thieves. They’re a little worse.”
The fund has returned 12.85 percent over the past five years and 9.37 percent over the past decade.
Manager Jim Moffett looks for developed economies with mid-term to long-term growth on the horizon. He especially likes export-based economies. He then searches for established, large-cap companies within those economies that have the ability to grow and are selling for low valuations. He then holds the stock for an average of six years.
Role in Portfolio
Morningstar recommends Scout International as a core portfolio holding.
Lead Manager Jim Moffett has directed the fund since inception in 1993. Since 2000, he has been joined by three portfolio managers and four analysts. Although he is well past retirement age, Moffett said he has no plans to make a change, though he has been saying, “I’ll give it a few more years,” for quite a few years now. Portfolio manager Gary Anderson, with the fund since 2000, is the “heir apparent,” according to Moffett.
Scout International Fund has an expense ratio of 1.01 percent.
The fund’s fondness for large caps and developed economies means, if small companies and emerging markets lead the pack, it will fall behind peers who are diversified among asset classes.
The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 5 on a scale of 1 to 5, with 1 being the best and 5 the worst.Value Line 2013-11-12
The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 4 for one year, 4 for five years, and 2 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.Value Line 2013-11-12
The fund's Value Line Risk Rank, a measure of volatility, is 3 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.Value Line 2013-11-12
This fund received the Gold award for the International Equity category in Standard & Poor’s 2010 Mutual Fund Excellence Awards.Standard & Poor's