Scout International Fund (UMBWX) is finding value in good companies in Europe, even as the continent struggles to move out of its economic recession, says manager Jim Moffett.

Japan has promise, but before it can move out of its multi-decade recession, it must deal with structural changes that will take time to implement, he adds.

Moffett spoke to Financial Advisor magazine on his investing outlook on the sidelines of the Morningstar Investment Conference.

Scout International Fund has a four-star rating from Morningstar and a silver medal. It has $9.5 billion in assets. It has a yield of 1.52 percent and an expense ratio of 0.99 percent.

The fund has about a 50 percent exposure to Europe, which is slightly less than its benchmark MSCI EAFE stock market index, which is about 60 percent European, he says.

German, Swiss and French companies dominate their holdings, with a few other European countries thrown in, as of April 30. Among some of the biggest holdings are Finnish financials company Sampo, at 2.35 percent, German athletic shoe company Adidas, at 1.64 percent and French information technology company Dassault Systemes, at 1.63 percent.

Moffet says in Europe their work focuses on “looking for good companies in troubled countries.”

Two examples he gave were Spain’s Inditex, and Italy’s Luxottica Group, both in the consumer discretionary sector. “Those are two rotten local economies, but (the firms) are worldwide businesses. That’s the common denominator,” he says.

The fund has a 25 percent weighing in financials, which is the largest sector weighting in the fund. Most of those are insurance companies, he says, such as Axa and Allianz. They are slowly adding some banks, including French bank BNP Paribas.

Moffett says they see Europe’s economic situation as several years behind the U.S. The U.S. is working its way out of the financial crisis, he adds. “It just takes time. The last time we had this was with the S&L (savings and loan) crisis,” he says.