Newspaper article The Christian Science Monitor

Global Investor's Motto: Always Be Ready to Leap MUTUAL FUNDamentals

Newspaper article The Christian Science Monitor

Global Investor's Motto: Always Be Ready to Leap MUTUAL FUNDamentals

Article excerpt

David Lui likes to have an exit strategy.

"My personal life is an extension of my professional life," he says. "At the movie, the first thing I look for are the exits. When I fly ... I always take an aisle {seat}."

When the portfolio manager took over the Strong International Equity fund in May 1998, it trailed just about every fund in the diversified international arena and had lost ground during four of its seven years.

So Mr. Lui shed all but 20 of the 175 stocks and mutual funds in the portfolio, unloading Eastern European, Latin American, and Asian holdings through the rest of the year.

As of last week, only 23 percent of funds in that category outperformed him, according to Morningstar, a mutual-fund tracker.

His stay-ready tactic has served him well at previous positions as well as with Strong's Overseas Fund, which he started last year and continues to run. At the end of June, it had returned 22 percent for the year, was in the top 2 percent of similar funds, and ranked 13th out of 570 global funds, according to Lipper Inc., which tracks mutual-fund performance.

The Stanford MBA invests only overseas, so to keep abreast of political situations, economic growth, and inflation around the globe, he pores over eight newspapers from the United States, Europe, and Asia every day.

Of particular interest are indications a government will devalue its currency, which increases exports but wreaks havoc for investors.

"When there is devaluation, it will not matter which stocks you own. Even if you owned the best stocks in Brazil earlier this year ... you lost 20 to 30 percent" when Brazil devalued the real in January, he says.

Only after those tests have been passed does Lui look at a country's particular stocks. For him, picking a stock actually is the last step in his multifaceted stock-selection process.

Lui scrutinizes financial statements and travels abroad from his New York office several times a year to meet with company managers. He converses with them in English, French, or Cantonese, which he spoke growing up in Hong Kong.

Lui seeks insight other portfolio managers have missed. He takes the answers, plugs them into a computer model, and decides whether to buy. …

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