When Rudolph-Riad Younes's ophthalmologist recently told him he was cockeyed, he was pleased. "I have one eye that can only see close and one that can only see far," boasts the manager of Julius Baer International Equity Fund (BJBIX ) in New York. "As a money manager, that's what you want."
Indeed, Younes's strategy depends on his dual vision. He and co-manager Richard Pell spot a major economic trend in a country, then probe the details of the companies that can benefit from it. The pair sport a 9.7% average annual return over the last five years, better than 98% of foreign funds in the BusinessWeek mutual fund universe.
Such sangfroid means Younes is not afraid of taking risks. But he prefers to take calculated ones where the return potential is great. "An insurer once said: 'There are no bad risks, just bad premiums,"' he says. His macro view of the world has led him to invest in Hungary, Poland, and the Czech Republic -- nations that will benefit from joining the European Union in 2004. As these countries become part of a "First World economy," says Younes, they will enjoy lower interest rates, which stimulate growth, and a stronger currency. "The returns will be huge over the next few years."
Drilling down to the stock-picking level, Younes favors Poland's Bank Pekao and the Czech Republic's Komercni Banka. Banks obviously benefit the most from interest-rate cuts, which allow them to lower loan rates and attract more borrowers.
Despite his enthusiasm for Eastern Europe, Younes is bearish overall. He has held a 15% cash position for the past year, much more than the 5% average for foreign-stock funds. He argues that the U.S. economy is on the brink of disaster because of its high consumer and corporate debt and that a slowdown here will damage global markets. "Wall Street investors," he says with a sigh, "have their pink-tinted lenses on. Their brains are rosy."
Although Younes doesn't wear rose-colored glasses, he may eventually need surgery to correct his eyesight. Thankfully, his vision of the global stock markets remains clear.
By Lewis Braham