AGF Funds Inc. held a live webcast today to tout the performance and showcase the portfolio managers of the AGF International Value Fund and AGF International Stock Class.

John Arnold of AGF International Advisors Co. Ltd., who runs the stock class, and David Herro of Harris Associates L.P., which has the value fund mandate discussed their investment outlook and took a few questions from attendees.

Both managers stressed that they are overweighting Europe, and underweighting Japan. They both also noted that since taking these portfolios, over a year ago, they have dumped technology and telecom stocks and looked at other sectors.

For Herro, the focus has been pharmaceuticals and consumer non-durables. He said that the market is too focused on short-term risks in drug stocks, and that it is ignoring the positive long-term fundamentals. His fund has cut technology and financials, and is heavily overweight in consumer stocks. It is 34.3% in consumer discretionary stocks compared with a benchmark of 12%.

Arnold indicated that he likes the long-term demographic fundamentals underpinning European financials, particularly retail banks. He said that he has no interest in technology right now, noting that they must generate profits and pay dividends before they are of interest.

As for their geographic calls, Arnold noted that his fund has entirely eliminated its Japanese exposure. Most of the Japanese portion of the portfolio was in financials, which Arnold says are now effectively bankrupt. As for the rest of Asia, he suggested that prices are too high to allow for many bargains. He was similarly gloomy on the outlook for Latin America, suggesting that he doesn’t see any recovery in Brazil, and that Argentina remains mired in a big mess too. The fund is fully invested, with 90% in Europe, just 3% in Latin America and 7% in non-Japan Asia.

Herro echoed Arnold on his concern over Asia, suggesting that there are simply better values available throughout Europe and the U.K. His fund has a 30% weighting in the region, compared to a benchmark weighting of 17.8%. The fund is also overweight U.K. stocks at 12.3% in the U.K., versus the benchmark of 10.7%. The fund is also now underweight in U.S. stocks, and has no exposure to Canada.

Both managers also touted their performance, and said that their funds boast lower price-earnings ratios and higher dividend yields than their benchmarks.

Overall, AGF reported that its aggregate compound return over the past 11 months (all funds combined) is 12%. That’s the highers in the industry, and ahead of CI at 10.9% and AIC at 10.5%. The numbers were compiled bu AGF Funds Inc. based on data supplied by brokerate firm Griffiths McBurney.