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One fund's value approach pays off

Overall, last year's performance numbers for international and global funds have been nothing to crow about. But look closer and you'll find that not all funds within those categories were dogs. Here's one that's been beating the averages for decades.

Jean-Marie Eveillard is the kind of portfolio manager investors ought to consider themselves lucky to find. For openers, he's experienced. He's been the portfolio manager of the First Eagle SoGen Global fund, (SGENX), ever since 1979. He's also a value investor and, as such, knows what it's like to be in and out of favor with the investing public. And finally, he invests his own money in the fund he manages.

"I eat my own cooking, " says Eveillard who has all of his own financial savings invested in the funds he manages.

One of the many reasons he does that is, " come Friday night, the last thing I want to do is try to figure out how to run my personal portfolio." Another reason: Eveillard believes it helps him to think like individual shareholders think---and they're more interested in absolute rather than relative returns.

In 2001, the First Eagle SoGen Global fund ended the year up 10.21 percent. Compare that to the average global fund, which according to Lipper was down 17.37 percent, or, the average international fund ( Morningstar considers this fund an international hybrid fund), they were down on average 21. 71 percent,

and no matter how you classify it, the fund's performance is worth noting.In the recent past, its performance record has plenty of plus-side returns too: Year-end 2000, it was up 9.7 percent; and in 1999, up 19.6 percent. Since inception, Eveillard says the fund has compounded at approximately 15 percent per year. Which he says is about 300 basis points above the fund's benchmark, the MSCI World Index.

Here's more from Eveillard about the First Eagle SoGen Global fund:

Q: What's your outlook for international and global investing in 2002?

Eveillard: Keeping in mind that we're value boys and girls, our investment approach is bottom-up as opposed to top-down. So for us, finding a security that we like, at a price that we like--whether it's in Switzerland or New Zealand, Europe or Japan---if the valuations are right, we're interested.

Q: About how many stocks are in the fund and where are the assets invested?

Eveillard: We own about 150 stocks and also have some bonds. About 15 percent of the assets are invested in fixed income securities---mostly high yield bonds. For example, we own some high yield corporate bonds in the US and a few high yield corporates in Asia.

About 25 percent of the assets are invested in Europe; 10 percent in Japan; six percent in Asia outside Japan; two or three percent in New Zealand or Australia, one percent in South America; one percent in South Africa; 35 percent in North America; as I said, 15 percent in fixed income; and about 5 percent in cash.

Q: You didn't own any New Economy stocks in the fund when they were flying high. What are the names of a couple of Old Economy stocks that have served you well?

Eveillard: A German company by the name of Buderus. They make heating systems, which is a fancy terms for boilers. And another was Rayornier. It's a forest products company.

Q: Going forward, what should potential investors know about your fund?

Eveillard: They should know that we have only two objectives, and both are long-term. The first is, we've got to deliver returns that are much in access of the returns of a money market fund because we are exposing shareholder in our funds to the risks associated with equities. The second objective is that we have to deliver higher returns than our benchmark because otherwise the shareholder could say, "hey, why should I bother with you? Why don't I go into an index fund?

Then, individuals should know that our first priority is to avoid losing money. We don't provide much excitement. If you want excitement, go to Vegas. Investing is not an exciting business. We're trying carefully to make money, but of course, our first priority has to be to try an avoid losing money.


Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.

To read more articles, please visit the column archive.

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