Andrew Braun, co-manager of the Goldman Sachs Mid Cap Value Fund, says he's finding many new investment opportunities in the small and mid-cap space as revenue growth resumes and margins keep expanding.

"That said," Braun adds, "It looks like mid/small caps are approximately 3 multiple points more expensive than large-caps on a p/e basis."

International Stocks
Talk in the international stock area has been dominated by emerging markets, which have also outperformed their developed market counterparts in the past few years. Advocates of this space give credit to the increased wages, disciplined fiscal policies and favorable demographics of these developing countries, which are seeing high single-digit GDP growth. Meanwhile, countries in Europe are struggling with debt crises and threads of deflationary spirals, and GDP has grown anemic, as it has in the United States.

But some managers think emerging markets aren't the whole story.

Brent Lynn the manager of the Janus Overseas Fund, and Morningstar's international stock fund manager for the year for 2010, said in a video interview on the site that although emerging markets performed well in 2010, some countries like China and Brazil did only moderately well, and that his portfolio's outperformance was also due to some developed market holdings, including some airlines and global financial companies in Europe. There are furthermore worries that China's efforts to tamp down its own inflation will cause a chill in the emerging market countries, so important has this sleeping tiger become to the world economy.

The managers of the Tweedy Browne Global Value fund (among the Morningstar nominees for international stock pickers of the year) are famous for their adherence to Benjamin Graham-style value investing. Wyckoff and co-managers Tom Shrager, William Browne and John Spears say there are many ways to play this emerging market growth by using the company's patented approach of seeking visible, recurring revenue streams in the multinational pond of companies selling at deep discounts to their intrinsic value. Wyckoff says there have been tremendous opportunities to find such names since the fall of '08.

Wyckoff says: "The first two-thirds of [2010] were pretty volatile. It started out in the first quarter with a pretty good market and then in the second quarter things fell apart as Greece began to have its problems. We finished the year fairly well.

"I think it's fair to say during the crisis we had the opportunity to buy a number of better-quality businesses. A lot of businesses you see in our portfolio today both on the international side and on the domestic side are large, globally diversified companies that sell the kinds of products that an aspiring middle class would like to have. And we have a growing global middle class around the world, and we have terribly significant growth in that area in some of the emerging markets, and a lot of these companies in our portfolio today, the Nestlés, the Diageos, the Heinekens, the KONEs, Novartis, Emerson Electric-these are companies that do business all over the world. Many of them are domiciled in Western Europe but do a significant amount of business in the emerging markets."

With this style, it all depends on the name. Would you want to own a Chinese company selling 90% to the U.S. with a high P/E ratio, they ask, or would you rather be with a company selling to the growing middle class in China, even if it had its headquarters in Switzerland?

A very different kind of international fund manager, though one who's been highly successful in the past couple of years, is Malcolm Gissen. He and Marshall Berol co-manage the Encompass Fund, a San Francisco-based go-anywhere international stock portfolio. Gissen says his fund was rated No. 1 in the one- and three-year periods by Morningstar, and that he won a 60% return in 2010 and a whopping 137% in 2009, mainly by scouring the globe for energy, metals and health-care plays. He even managed the huge 2009 return while sitting on 30% cash, he says. Part of the success, he says, is due to the huge demand for commodities and the supply constraints that will come about because of it.