Tusan also likes European banks. "What people will be surprised to know is there is no subprime lending crisis in Europe, so it's a haven of sorts for the problems U.S. lenders are experiencing right now. I think the whole European financial services arena is a great place to be."
Obviously, with a small- and mid-cap orientation, Aston/SGA International is always on the lookout for emerging market companies, but reserves the right to invest in developed markets as well, with market caps between $100 million and $15 billion."What we're trying to deliver here is a core international portfolio. We're trying to deliver alpha," Tusan says.

On the opposite end of the spectrum, Kirk Brown, the portfolio manager for American Beacon International Equity Fund, is on the lookout for value stocks, and largely avoids some of the risks associated with international small-cap and emerging market funds.
The fund uses a multimanager approach and "is a worthy choice for investors seeking relatively tame foreign exposure," says Morningstar analyst William Samuel Rocco. The fund has three-year returns of 10.8% and five-year returns of 20.43%.

"We are looking for stocks with attractive future values, and a catalyst that will unlock those values, regardless of what the sectors or countries turn out to be," says Brown. "Our managers do well investing in more defensive names, not tied as much to the economy. We're looking for stocks that will do well in a slower environment."

American Beacon's top picks these days? One is Sanofi-Aventis, the French drug company. Brown says Sanofi, the No. 1 drug company in Europe (and No. 3 worldwide) wasn't generating the kind of earnings analysts expected, so it fell off the radar a number of years ago, but now it's gaining momentum with a stock repurchase program and a planned increase in its dividends.

Right now, the American Beacon fund has an underweighting in financials and materials and an overweighting in telecom, but the managers aren't writing off the first two sectors. "We are re-evaluating financials and materials now. At some point, there is going to be a time when the stocks hit their price targets," says Brown. "We're doing a lot of work analyzing these stocks, and we're seeing the cleanup of books and loan write-offs. These may be attractive sectors going forward."

On the telecom front, Brown likes Vodafone. "There is increased phone usage throughout Europe. Part of the catalyst for us is the company has a low double-digit P/E ratio and no major capital expenditure projects in the works."

Vodafone, like many telecoms, spent hugely on licensing throughout Europe, but since 2000, the company has pared back, written off debt and gotten back to basics, Brown says. "The price came down hard in 2000 and languished there. It was no longer a sexy story or momentum-type company, so it lost its following. It's in our top five stocks because we really believe there is great upside and the downside is limited," Brown says.
Investors looking for a different type of international fund may find it in the Utopia Yield Income Fund, which has a year-to-date return of 0.58% and a "do-no-harm" philosophy of investing.

The fund looks for both solid bond and equity offerings around the globe. "A lot of people think that global is something that you add to a portfolio," says Paul H. Sutherland, portfolio manager of the Utopia fund. "We believe that all money should be managed globally. Anything else is silliness. Everything is global, so that's our main operating principle: The world is our oyster."

Fittingly, the fund's tagline is "Investing Without Borders," and it does just that, with investments spread throughout the world, including the United States, where it has been favoring bonds lately. "Dividends helped us a lot with performance," Sutherland says. But that doesn't mean the fund's manager isn't scouring the globe for opportunities. Right now, Sutherland says, he likes energy companies, particularly Pargesa in Switzerland, which has the advantage of the Swiss franc backing it and is trading at a 30% discount. "Its holdings are impressive. It owns a big chunk of Total, the oil and energy conglomerate, as well as energy companies Imerys and Suez, and also has significant assets in wind energy."

That impresses Sutherland. Another company he likes is Australia's Babcock & Brown Wind Partners, which has wind farms all over the world. "We think this is an incredible opportunity, with more than half the states in the U.S. offering subsidies and credits for the use of wind energy," Sutherland says. With oil hitting the $100 mark per barrel, wind is becoming more competitive. Another reason to like the company: It's paying shareholders a 9.89% dividend.