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Two money managers examine portfolio management strategies in the latest Issue of The Wall Street Transcript available at (212/952-7433) or http://www.twst.com/info/info629.htm

TWST: Could you give a brief overview of Vontobel Asset Management and your responsibilities there?

Mr. Jain: Vontobel is one of the larger private banks and is listed on the Zurich Stock Exchange. Globally we manage around 40 billion. Vontobel Asset Management in New York is a wholly owned subsidiary of Vontobel Holding AG in Zurich, and here in New York we manage around 1.3 billion of assets under management, including investment management in domestic and international equities. We also serve and manage private client assets for individuals both inside and outside the US. We also manage a variety of mutual funds, including U.S. Value Equity, Vontobel International Equity and Emerging Markets Equity.

TWST: Let’s look to the immediate future. What changes in the portfolio do you think that you might make over the next six months or so, and what do you think you might be doing differently based on everything you’ve told us?

Mr. Jain: I don’t think that anything is going to change dramatically. Frankly, I was running the numbers to see how undervalued the portfolio is. If you treat the portfolio as a stock, the Vontobel International Fund (VNEPX) is selling at around 11-12 times earnings. The earnings will grow at high single digits — 7%, maybe 9% — depending on how the environment is. But generally speaking, they will grow because there’s not much cyclicality, unless you get a worldwide depression or something, and it’s yielding 3.3%. If you assume that interest rates go up (and they are), say, 5.5%-6%, the portfolio is around 55%-60% undervalued. Most of the names are far from their price targets; I don’t think anything would change unless the markets or our portfolio really takes off. Most of the names are just too far from the price targets. So if you ask me, I don’t think anything will change too much. The only thing that may change is that some of the more attractive names in the portfolio may be rebalanced, so we may end up adding to some of the names that have really gotten beaten down and trimming from the stocks that have less upside potential. For example, last week we sold Carlsberg because we were buying in March when the stock collapsed. The stock ran up a little, but it’s still not at our price target. We found better value in Bunzl (BNL) in the UK or even Royal Bank of Scotland (NYSE:RBS6B11). That kind of change may occur, but as a portfolio, it’s hard to see too many changes because, as I said, the portfolio just looks extremely attractive at this particular juncture. I know that we will underperform from time to time. For example, if cyclicals run we will trail. I think it’s almost a given that we will go out of favor every once in a while, because the portfolio is extremely high quality and will grow. On a two- to three-year basis, I think even if the multiples don’t expand, the total return potential of the portfolio is better than what you could expect from the fixed income side or the index.

Investing in International Equities - Rajiv Jain, a Senior Vice President at Vontobel Asset Management, Inc., examines portfolio management strategies in this timely and deeply informative 5,000-word interview from The Wall Street Transcript.

Global Investment Strategy - Stuart Schweitzer, a Global Investment Strategist at JPMorgan Fleming Asset Management, examines portfolio management strategies in this timely and deeply informative 5,700-word interview from The Wall Street Transcript.