NEW YORK (
) -- Virginie Maisonneuve, co-manager of the
Schroder International Alpha Fund
, says companies with strong positions in China and Brazil will outshine their peers.
The mutual fund has risen 38% this year, better than 94% of its
peers. Over the past five years, the Schroder International Alpha Fund has returned an annual average of 7.3%, beating 79% of its rivals.
Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.
Are you bullish or bearish?
On a medium-term basis, I am bullish on quality growth at a reasonable price. I like globally competitive and attractively priced companies offering superior medium- to long-term earnings growth.
In the shorter term, the investment environment is clearly being driven by governments' efforts to curtail the financial crisis. They are injecting massive amounts of liquidity through various support programs. This liquidity, given low interest rates, is also supporting equity markets. It is also accelerating some of the global structural shifts already under way, such as the one related to the increased share of emerging economies in global growth. Most emerging-market economies entered the crisis in better financial shape than their developed counterparts. In particular, countries such as China or Brazil. Global competitive forces, particularly from Asia, and weaker global demand in some key industries with ample capacity, will continue to increase pressure on marginal returns. This provides an earnings opportunity for quality global companies with the right products or services that can be lean and have good access to capital.
What is your favorite sector?
As a stock picker, it all comes down to the ratio of relative valuation to expected growth trends for each stock. Currently, we find attractively priced growth in names like
as we believe that soft commodity prices will support the company's earnings growth.
We also like
, a car manufacturer in China with a joint venture with
. It is benefiting from the Chinese government's tax-support program to encourage car sales and from middle-class income growth. We also like
, a U.K.-based gas producer and developer. It has a very attractive valuation and it's a beneficiary of climate change.
What is your top stock pick?
is a Hong Kong-based company involved in real estate, transportation, consumer products, industrials and marine services. It has an upside to fair-market value of over 20% and sells at an attractive price-to-growth ratio of 1.3 times. It is a strong beneficiary of Chinese economic revival and of its impact on Hong Kong. It is a well-managed company with a conservative balance sheet.
What is your favourite "sleeper" stock pick?
is one of the world's largest generic-drug manufacturers. It also has a proprietary drug for multiple sclerosis -- Copaxone. The company is a beneficiary of long-term demographic trends as governments around the world, in an effort to lower health-care costs, are increasingly in favor of generic drugs. With a strong balance sheet and management team, earnings trend growth over the next three to five years of 30%, and a current P/E valuation below 12 times, the stock is a core holding in the portfolio.
What sector, industry or stock would you avoid?
I would avoid regulated utilities in Japan and Europe, as the earnings prospects for those are very limited and valuations are not that appealing.
Written by Gregg Greenberg in New York
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.