) -- Jerry Zhang, manager of the
Evergreen Emerging Markets Growth Fund
, says telecommunications providers have room to grow in the developing world. He's bullish on
The $670 million fund has earned
top rating, five stars. Brazil, Taiwan and South Korea make up more than a third of the fund, whose largest holding is
. It's up 58% this year, beating the
Morgan Stanley Capital International EAFE Index
by 31 points. The fund has returned 19% annually, on average, in the past five years, beating 98% of its peers.
Welcome to the
"Fund Manager Five Spot," where America's top mutual fund managers give their best stock picks during a rapid-fire Q&A.
Are you bullish or bearish?
Our goal is to participate in the long-term growth in emerging markets through rigorous pursuit of strong companies at compelling prices. With the sharp rally in emerging market stocks since March, finding companies that fit our criteria for both quality and valuation has become increasingly challenging. We are convinced that emerging markets companies are well positioned for sustainable growth over the long term, but for the near term we prefer to take a cautious stance.
What is your top stock pick?
China Mobile is the largest wireless operator in the world with over half a billion subscribers. The shares have underperformed year-to-date because of concern over competition from two other major operators, which recently became fully integrated players with both fixed-line and wireless operations.
We argue that China Mobile is much more resilient than people think. We estimate that about two-thirds of its subscribers are ring-fenced from competitors, including most of the high-end corporate market and the rural market. For corporate users, China Mobile has very competitive indoor coverage in all urban areas, while the rural market is essentially owned by China Mobile with 95% market share. It is very attractively valued for such as dominant franchise.