“Anything that is international equities excludes the U.S.; therefore, it is much easier for those managers to outperform,” said Frank Talbot, Citywire’s head of investment research. “There’s a lot of good managers in international equities, where the outperformance is above 50 percent, meaning that more than half of the fund managers add value in those peer groups.”
Of the top five managers in this breakdown, the first four all run money in non-U.S. equities, with a solitary bond manager bucking the trend to take fifth place.
In at No. 1 is Tiffany Hsiao, who runs the Matthews China Small Companies Fund. San Francisco-based Hsiao grew up in Silicon Valley but has some important family connections further afield — both to the part of the world that she invests in and to the kind of companies she picks.
Hsiao’s grandmother, although illiterate and widowed by the age of 26, singlehandedly raised a son who later emigrated from Taiwan to the United States and became the lead researcher in an electronics company that helped create the first laptop to use Intel’s 386 processor.
“I saw firsthand that you can start small with innovation,” Hsiao said. “As an innovator, you can really change the world. I saw that through my father.”
Hsiao’s focus on domestic companies within China not only has generated alpha but also has helped to shield the fund from the recent sell-off that hit Chinese stocks in the wake of the trade dispute with the United States.
Hsiao said she has never let being a woman stop her from doing anything. “I think the most important advice I would give to women is that you have to find a company that really values your talent and your input,” she said. “I was given the lead manager job at Matthews when I was eight months pregnant with my second child.”
Another emerging markets star, Allison Fisch of Pzena Investment Management, is also on the lookout for good companies, but for a different reason.
Fisch is one of four managers on the Pzena Emerging Markets Value Fund — a deep-value strategy that invests in businesses that are currently “in pain,” she said.
“What we are looking for is a good company where something bad has happened,” Fisch said. “It can be either a self-inflicted error that the company did, or it can be pain throughout an entire industry or economy.”
Whatever the case may be, the job of the research team is to figure out whether this is a temporary or permanent problem, she said.
As a psychology major who graduated with a liberal arts degree, Fisch did not consider a career in investing until she realized her interest in learning about different industries and understanding business models.