Tibbles favors European telecommunications and media companies. Top holdings include Esprit, Siemens, Vodafone Group, Total Fina Elf and Societe Generale.
International fund managers are keeping a small portion of their portfolios in Latin America and other emerging markets. Tibbles has limited exposure to the emerging markets. In Latin America, he sticks with large blue chip companies with market capitalizations of $1 billion or more, such as Coke.
"We have passed through the easy part of the cycle for Latin America and emerging market stocks," Tibbles says. "When U.S. interest rates rise later in the economic cycle, emerging markets will find it more difficult based on a macroeconomic perspective. It is hard for companies to borrow, and there is less liquidity."
Warren at T. Rowe Price says that Latin American stocks were supported by some powerful tailwinds last year. Low global interest rates, a strong rebound in commodity prices and improved capital flows to the region improved economic conditions.
He expects the Brazilian market to outperform the rest of the region due to economic reforms. "There were significant advances in fiscal reform and excellent trade numbers," he says. "The fall in inflation expectations allowed the central bank to lower domestic interest rates aggressively. It sets the scene for continued recovery." The fund has about 2% of assets invested in Mexican and Brazilian companies that include Groupo Pao de Acucar, Petrobas, Wal-Mart de Mexico, Femsa, America Movil and Group Financiero.