A FTER a disastrous 1998, international funds started staging a comeback in 1999, and are now poised to truly take advantage of recovering world economies in 2000.
One of the best-positioned portfolios is the William Blair International Growth Fund, managed by George Greig since 1996.
The fund is sitting on a year-to-date gain of 78.66 percent, which he attributes to careful stock selection and an increased weighting in small-cap Japanese companies in recent months when the Japanese economy began a huge upswing.
“It seems as if everyone was shocked in the first quarter at how rapidly the Asian economy bounced back from the doldrums of 1998,” Greig said. “I wasn’t surprised. You had the Japanese government fix their banking system, which I expected would bring some fresh air into that market.”
Accordingly, Greig started implementing a strategy from which he has not yet diverged: identifying the companies that would benefit most from the recovery and buying them while they were still cheap.
That led him to establish positions in NTT Mobile Communications Network, which is now the second-biggest holding in the fund, and Rohm Co., the Japanese chip company that is also in the top-five holdings.
The biggest position is in Nokia Oyj, the Finnish telecommunications giant that is having such success upgrading the telephone systems of developing countries by bypassing land lines and building a totally cellular system.
“The international community is adopting wireless communications at a pace far faster than in the States,” Greig said. “Wireless is going to be the way to go in emerging markets. It’s where the growth is.”
It’s important to remember that while Greig likes buying stocks at bargain prices, the mission of his fund is to identify growth opportunities, not value.
To that end, Greig is not afraid to hold on to his position in Sonera Oyj, another Finnish telecom company, which posted a 20 percent sales growth rate last year. Although the stock hit a 52-week high yesterday, leading to some calls to lighten the load and ensure the profits, Greig considers it a core holding in the portfolio.
Meanwhile, imitating U.S. growth managers, Greig is keeping his eye on the Internet.
“We’re getting to the point where we’re asking every company we meet with for their e-commerce strategy,” he said.
A recent addition to the portfolio is from the Internet sector. It is Internet Initiative Japan, an Internet service provider for Asian companies.
Another newcomer is Chapters Online, which Greig described as “the Barnes & Noble of Canada.”