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Shares of grocery firm Delhaize Group rebound

U.S.-traded shares of the Belgian supermarket giant are up 8.7% this year after dropping last year. Also, Templeton BRIC, which invests in the fast-growing economies of Brazil, Russia, India and China, has had feast-or-famine results.

March 20, 2011|By Andrew Leckey

Question: What are the prospects for my shares of Delhaize Group? Are things looking up at all?

Answer: Although it derives most of its operating profit from the United States, this Belgian supermarket giant isn't a big name among American investors.

With about 2,800 stores worldwide, including hypermarkets and small-scale locations, Delhaize emphasizes low prices while avoiding the relentless and profit-killing promotions that the grocery industry commonly uses to lure customers.

In this country Delhaize operates supermarket chains Food Lion in the mid-Atlantic states, Hannaford in New England and Sweetbay in Florida. The company has about 1,600 stores in the U.S., about 800 in Belgium and Luxembourg and about 200 in Greece. It also has stores in Indonesia and Romania.

In a move to expand further while reducing its dependence on the U.S. market, the company recently agreed to acquire Serbian food retailer Delta Maxi Group for $1.3 billion.

Last year the company earned $800 million on sales of $29 billion. Its U.S.-traded shares are up 8.7% this year after dropping 3.9% last year.

Delhaize shares, which aren't widely followed on Wall Street, have received one "buy" rating and one "hold" rating from analysts who track the stock, according to Thomson Reuters.

Question: I am frustrated with my shares of Templeton BRIC. Does it have longer-term potential?

Answer: This trendy fund was launched in 2006 to invest in the fast-growing economies of Brazil, Russia, India and China — the BRIC countries. But it hasn't been an easy ride for the fund's investors.

The fund's "A" shares had a total return of 6.1% in the last 12 months and a three-year annualized decline of 1.1%. Both results ranked the portfolio toward the bottom of diversified emerging-markets funds.

"It has had feast-or-famine results, exemplified by a 50% gain its first year and 61% drop its second year," Morningstar Inc. analyst Karin Anderson said. "This fund is not something investors need."

Templeton BRIC is limited by its focus on the four BRIC countries. Investors "can gain access to those markets through a more diversified emerging-markets fund," Anderson said. "The fortunes of the emerging markets are constantly changing, and you want a fund that reflects that."

She also described the fund's 2.15% annual expense ratio as too high. In addition, the fund imposes 5.75% sales charge on purchases of fund shares and requires a $1,000 minimum initial investment.

Brazil recently accounted for 32% of the portfolio, China 24%, India 21%, Russia 9% and Hong Kong 1%, with the rest in cash. Energy companies and industrial-material firms each represent about 30% of the fund's holdings, with financial services representing about 25%.

The portfolio is managed by a team consisting of Dennis Lim, Tom Wu and well-known international asset manager Mark Mobius.

Andrew Leckey answers questions only through the column. Write to him at yourmoney@tribune.com.

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