Eaton Vance's Rees-Moog Sees Tremendous Values in Emerging Markets

2. Your largest weighting by country is South Korea. Are you confident in its economy?

The [MSCI Emerging Markets] index weighting is 22%-23%, so we're underweight. We're not index investors, mind you, but we're a little bit light relatively speaking.

What we like in Korea, again, is primarily driven by valuation. Our biggest holding is a [office-equipment] company called Sindoricoh, a subsidiary of Ricoh Japan, which has a sizable holding.

Sindoricoh has a dividend of about 4%, it has 25% of its market capitalization in cash on the balance sheet, and a P/E of 9. It is also benefiting from a technology transfer from its Japanese parent. It has a strong domestic market, as well as some export business -- not just in the U.S., but also to the Asian region.

That's an example of what we're looking for. The more stocks I can find with these characteristics, the happier I would be -- a combination of growth, competitive advantage and low valuation. It's not quite perfect (laughs), but stocks like that are very good finds.

We've bought into the banking sector in Korea recently.

Are you concerned about rising consumer debts in Korea?

Bill & Bill's Excellent Bull Signal When fund guru gross and market-beater Miller both sound rosy about stocks, it must be good.

SEC Wants Investors to Understand Funds Better, and Some Funds Aren't Happy The industry has a bone to pick with greater frequency of disclosure.

Yes. Credit card debt has been a worry, and credit card delinquencies have become surprisingly high. That was actually one of the reasons for buying banks. There's been quite a large sell-off in these shares, which made valuations more attractive. The banks themselves are less directly affected. It's not a risk-free investment.

But Korea has changed. When I was first investing in Korea, it was all about exporters. Korean very much fits in to the broad theme of looking more for domestic demand.

3. As of Sept. 30, your two largest holdings were South African gold companies -- Harmony Gold Mining(HMY Quote), and Gold Fields(GFI Quote). Why do you like these companies, and have you lightened up at all?

No. Actually, we have taken little bits of profits because gold stocks have done very well to make sure we weren't even more exposed than we are. But we haven't sold since the end of September.

Why do I like gold, and why do I like South African gold? I like South African mining stocks because they have become much more focused on profitability since South Africa has become a more open economy. The old gold companies used to be very profitable, but they would use their money to buy vineyards and all sorts of extraneous investments because they couldn't move their money out of the country.