Investing in international equity markets has emerged as a lucrative option for investors, most of whose portfolios consist 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 international mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.
American Century International Discovery (TWEGX) seeks capital appreciation. The fund invests heavily in equity securities of small and mid-cap firms located in foreign nations. It invests in companies from mature economies as well as emerging markets. The international mutual fund returned 20.61% in the last one year period.
The international mutual fund has an expense ratio of 1.48% compared to a category average of 1.63%.
Fidelity Advisor International Capital Appreciation A (FCPAX) primarily invests in foreign equity securities and also purchases those issued from emerging markets. Investments are allocated across countries after taking into consideration their market size relative to the entire global market. The international mutual fund has a ten year annualized return of 4.08%.
As of December 2010, this international mutual fund held 163 issues, with 1.72% of its total assets invested in Royal Dutch Shell PLC B.
T. Rowe Price International Discovery (PRIDX) seeks capital appreciation over the long term. The majority of the fund’s assets are invested in stocks of foreign small and mid-cap companies. It invests in a minimum of ten countries and a hundred different companies at any given time. The international mutual fund has a five year annualized return of 6.92%.
Justin Thomson is the fund manager and has managed this international mutual fund since 1998.
Waddell & Reed International Growth A (UNCGX) primarily invests in foreign firms that have growing market share, an advantageous competitive position and the ability to deliver long term growth. The fund focuses on investing in mature markets, but may also invest in emerging economies. The international mutual fund returned 14.84% in the last one year and has a five year annualized return of 5.41%.
The international mutual fund has a minimum initial investment of $500 and an expense ratio of 1.52% compared to a category average of 1.55%.
John Hancock Funds2 International Opportunities 1 (JIIOX) seeks capital growth over the long term. At least 65% of its assets are utilized to purchase common stocks of foreign companies with long-term growth potential. The fund invests in companies worldwide, regardless of their size. The international mutual fund returned 14.12% in the last one year period.
James G. Gendelman is the fund manager and has managed this international mutual fund since 2005.
To view the Zacks Rank and past performance of all international mutual funds, then click here.