Top Picks for 2010: T. Rowe Price New Asia (PRASX)

"It may seem a strange pick considering that the fund is up almost 100% for 2009. Normally, after such a run, we would not pick the fund as a favorite for next year. In addition the entire range of emerging market stocks are now among the favored by surveyed managers for 2010.

"That too should serve as a warning to stay away from the group. Having duly warned you we are nevertheless sticking with our recommendation.

"What attracts us to the fund is the weight it gives to both China and India. Each is about 30% of the fund. We like that mix.

"In fact, what attracted us to the fund in the first place is that it gave reasonable weight to India. We see most Asian funds as underweighting India. We would be wary of a pure India fund and right now we are not keen on a pure China fund. It is the blend that we like.

"Even though the emerging market funds have been Wall Street favorites this year, we think their run is by no means over. The emerging markets are being valued at about the same level as are developed markets.

"Considering their potential growth rate, they are actually selling at a more than trivial discount of what they would sell for were they a developed market. We do not believe the discount makes much sense any more.

"Today's emerging markets are no longer the crap-shoots of the past. As this is being recognized,we look for higher normal valuations (price/earnings ratios) than in the past.

"There was a manager change for the fund in April, as the former manager retired. So far the fund has not lost a beat.

"We would not expect it to, considering the strong bench T. Rowe Price brings to Asian investment. We are still recommending the fund despite its meteoric gains in '09."

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