Ivy Mutual Fund Buys Energy Explorers

OVERLAND PARK, Kan. (TheStreet) -- John Maxwell, manager of the Ivy International Core Equity Fund(IVIAX), predicts the economy's recovery will be stronger than investors expect, bolstered by government-stimulus efforts and growth in Asia. For now, he's avoiding financial and utility stocks.

His fund, which is run by Waddell & Reed Financial(WDR) in Overland Park, Kan., has earned four stars from Morningstar(MORN). The portfolio has gained 40% this year, beating 92% of its peers. It has increased 0.1% annually, on average, for the past three years, better than 98% of competing funds.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five questions.

Are you bullish or bearish?

Maxwell: I am more bullish than bearish. I believe the economic recovery will be stronger than anticipated, and the market is likely to continue to perform at a much more muted pace. I also think the short-term positives outweigh the negatives. Clear positives include the continued and unprecedented global stimulus, renewed and reinforced growth in Asia driven by China, and massive corporate cost cuts that allow for buoyant margins.

We expect to continue to shift our focus to steady growth players that fit our criteria for sustainable competitive advantage. These companies will likely perform better whether the recovery begins to fade or merely matures.

What is your top stock pick?

Maxwell: My top stock pick in a bullish scenario is Mitsui & Co., a mineral resources and energy company in Japan. At the bottom line, 80% of the value is iron ore or liquid natural gas (LNG) and the stock has significantly lagged its metals peers this year, primarily because it is in Japan, which has been a source of funds.