Shift Out of U.S. in Mid-2011, Jubak Says

The Fed's support will wane, making Brazil and Australia particularly attractive, the fund manager says.
By Gregg Greenberg ,

NEW YORK (TheStreet) -- Financial-writer-turned-money-manager Jim Jubak says Brazilian banks and Australian coal miners are among the best places to invest in 2011.

The

Jubak Global Equity Fund

has returned 7.4% since it was started in July. The manager has recorded his stock picks in what he calls the Jubak Journal since 1997.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

Should investors put more of their money in U.S. stocks in the coming year or outside?

Jubak:

I would divide 2011 into two parts. The first half you want to be in the U.S. as the Bernanke QE2 runs through and as you still have problems with inflation and countries raising their interest rates. The second half of the year, it's likely that the U.S. economy won't look quite as good relatively, and you will have countries like Brazil and India coming to the end of their interest rate increases. So you want to be in those markets for the second half of the year.

Why are you so positive on Brazilian banks such as Itau (ITUB) - Get Report and Bradesco (BBD) - Get Report?

Jubak:

What you are looking at there is the growth of the middle class, and that is one of the great stories of the developing markets in general. The Brazilian middle class is adding lots and lots of consumers, and they are buying new financial products. Remember, this is an economy where you didn't really have an opportunity to offer consumers credit because the interest rates were so high and now those products are coming on line.

You are also bullish on Australian coal stocks like Whitehaven and Macarthur.

Jubak:

Australia is a great place to be mining coal because you are very close to the two big end markets you want to send it to: China and India. Shipping costs are a lot lower. So it is a way to play those two markets using the Australian economy as a base, and those are the two big producers.

What are your favorite Chinese stocks now?

Jubak:

Actually, it is a distributor that works in putting markets together for

Wal-Mart

(WMT) - Get Report

and

Target

(TGT) - Get Report

and others. It's a company called

Li & Fung

(LFUGY.PK)

and it trades in Hong Kong and a little bit here. I like them because they are growing a middle-man position and moving out very aggressively to try to cut costs for those big companies. And that's really going to be a problem and an opportunity for them going forward.

If you had to choose a single U.S. stock to be your top pick for 2011, what would it be?

Jubak:

Probably

Deere

(DE) - Get Report

. We are looking at one of those big commodity and agricultural-commodity cycles. And Deere is the easiest and the best way to play that. They are growing around the world. So as commodity prices go up and farm incomes go up, that will be really good for the sales of tractors.

-- Reported by Gregg Greenberg in New York.

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