Global Growth On Track, Manager Says

U.S. Global Investors’ East European Fund (EUROX) is among the industry leaders when it comes to five-year annualized returns, according to Lipper, which notes that the fund returned nearly 42 percent for the period ending November 21, 2007.

And Julian Mayo, who helps lead this fund and U.S. Global’s Global Emerging Markets Fund (GEMFX) at Charlemagne Capital in London, says — despite strong appreciation — emerging markets still offer investors “relatively good value.” They trade at a small discount relative to their U.S. peers and have “super earnings-per-share growth,” says Mayo.

“Fundamentally today, these investments offer structural quality and growth,” the portfolio manager explains. “Asia companies in the 1980s were generally poor in terms of value creation. But now, these companies have strong balance sheets and debt-to-equity ratios.”

And emerging markets overall are fiscally sound. “Profit focus and profit growth are a focus for companies,” Mayo shares, as foreign ownership and other conditions have prompted a sea change in management, efficiency and performance.

He suggests that investors consider using developed-country holdings as one side of a “binary barbell,” with holdings in emerging markets occupying the other side.

In the third quarter of 2007, U.S. Global Investors grew its assets under management by some $300 million to about $5.35 billion; the company’s board approved a doubling of its monthly dividend beginning in October.

“The wind continues to hit our sails when it comes to growth in emerging markets and natural resources, and we remain confident in those sectors,” says Frank Holmes, CEO and chief investment officer. “What we’re seeing today in emerging nations makes it a classic example of great bull markets climbing a wall of worry and doubt. Despite years of strong GDP growth in China, India and elsewhere, much of Wall Street and the financial media remain unconvinced that this global shift is for real.”