Investing in foreign equity markets has emerged as a lucrative option for investors, most of whose portfolios consist almost entirely of domestic securities. Around half of the world’s equity market capitalization is made up by international equity markets. Emerging markets, which continue to grow at a rapid pace, are of particular interest for those looking at appreciably higher rates of return. However, such investments also carry unique risks and mutual funds provide a less risky means of exposure to this sector than stocks.
Below we will share with you 5 top rated foreign mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.
GMO Foreign Small Companies III (GMFSX) seeks total return which exceeds that provided by its benchmark, the S&P Developed ex-U.S. Small Cap index. The fund invests the majority of its assets in small companies with economic linkages to foreign countries. The foreign mutual fund returned 14.54% in the last one year period.
The foreign mutual fund has an expense ratio of 0.86% compared to a category average of 1.53%.
Templeton Foreign Small Companies A (FINEX) seeks long term capital growth. It invests the majority of its assets in smaller companies located abroad, including those based out of emerging market countries. The companies which it invests in have market capitalizations between $2 billion and $4 billion. The foreign mutual fund has a ten year annualized return of 5.99 %.
Bradley Radin is the fund manager and has managed this foreign mutual fund since 2007.
Wasatch International Growth (WAIGX) invests a large share of its assets in securities issued by companies located in emerging markets. It invests in a minimum of five countries included in the MSCI AC World Ex-U.S.A. Small Cap index. The foreign mutual fund returned 34.15% in the last one year and has a five year annualized return of 6.99%.
As of September 2010, this foreign mutual fund held 111 issues, with 4.47% of its total assets invested in State Street/Ficc Repo.
Laudus International MarketMasters (SWOIX) seeks capital growth over the long term. It invests a large proportion of its assets in equity securities of companies located outside the US. The fund invests in companies regardless of their market capitalization. The foreign mutual fund returned 17.14% in the last one year period.
The foreign mutual fund has a minimum initial investment of $100 and an expense ratio of 1.62% compared to a category average of 1.55%.
Bernstein Emerging Markets (SNEMX) invests at least 80% of its assets in companies located in emerging markets. It invests in emerging markets value stocks and growth stocks with equal emphasis. The foreign mutual fund returned 18.55% in the last one year and has a ten year annualized return of 15.92%.
Seth J. Masters is the fund manager and has managed this foreign mutual fund since 1995.
To view the Zacks Rank and past performance of all foreign mutual funds, then click here.