This story appears in the
February 2003 issue of
Entrepreneur.
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Just as the Big Grizzly has hit our markets hard, it's done
the same to many around the world. But if you're a fundamental
bottom-up research analyst, like those at the MFS International New
Discovery Fund (MIDAX), that's good news. "There's a
lot of value to be gained from that," says Betsy Palmer, one
of the fund's managers. "The valuation levels of
international stocks compared to U.S. stocks are cheaper right now,
whether you look at the price-to-earnings ratio, the price to cash
flow, the price to book value or price to sales."
And, because the international smaller-cap stocks don't
perform as large-cap U.S. ones do, that could mean investment
opportunity. How so? Palmer says international small- and mid-cap
stocks are more dependent on local economies than large-cap U.S.
stocks. "If you're a French retailer, for instance, it
doesn't matter what's going on with the global
economy--what's important is what's going on
locally."
With that in mind, this Morningstar 5-star rated fund-which also
ranked No. 1 in performance for the five-year period ending October
10, 2002, according to Lipper--isn't for everyone. With a
portfolio of 150 different stocks from 30 countries, a portfolio
turnover rate of at least 100 percent each year, the fund's
performance can be volatile and tracking what's in it,
difficult.
Dian Vujovich is an author, syndicated columnist and
publisher of fund investing site www.fundfreebies.com.