World of Opportunity

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.