mlk_man
04-26-2006, 06:12 AM
Four International Funds at the Top of Their Game
Janet M. Brown
DAL Investment Co.
http://www.bottomlinesecrets.com/images/drop_caps/blue_y.gif ou really can't complain about the performance of US stocks over the past three years -- the S&P 500 Index was up an average of 17.2% a year through March 31. But in the same period, foreign markets (as measured by the MSCI EAFE Index) rocketed, returning an average of 31.1% a year. So is it time to take your profits in foreign stocks or funds and redeploy the money into the lagging US market? Many advisers may think so, but not Janet Brown, as she explains here...
We operate on the premise that recent performance is what matters most. The typical cycle for stock sectors is four to five years. As long as a fund is performing among the top third of other funds with similar risk characteristics, it's worth holding on to.
Our model fund portfolio is now more than 50% in international funds. That may seem extreme to many American investors, but consider that non-US stocks account for 60% of worldwide market capitalization. By that measure, we're underweighted in foreign stocks.
With the continuing globalization of the world's economies, there's not as much extra risk in foreign stocks as there used to be. Transparency -- the existence of rules and regulations that give investors a window into accounting and corporate decision making -- has gotten better globally, even in emerging markets. And those markets now supply the world, accounting for 70% of the global output of manufactured goods. For these reasons, we believe that at least 25% of a typical US investor's stock portfolio should be in foreign markets today.
If you want to invest in international funds with relatively low risk, consider the following four no-load choices. All are solid performers with volatility ratings equal to or less than that of the broad US market, and all have been doing very well of late. These funds also are relatively small, which gives them a nimbleness that is not possible with much larger funds.
Wright International Blue Chip Equities (WIBCX). This $126 million fund invests in large companies, such as Royal Dutch Shell and ING. It recently was about 50% invested in continental Europe, 25% in the Pacific region and 17% in the UK.Annual expense ratio: 1.62%. Three-year annualized total return through March 31: 30.3%. www.wisi.com (http://link.bls.bottomlinesecrets.com/h/62KH/62K1/VU/ONO8D)
JohnsonFamily International Value (JFIEX). This fund, with $98 million in assets, is less volatile than most similar funds, thanks to its value orientation.Annual expense ratio: 1.41%. Three-year annualized total return through March 31: 29.5%. www.johnsonfamilyfunds.com (http://link.bls.bottomlinesecrets.com/h/8ZY8/62K1/VU/ONO8D)
ICAP International (ICEUX). With $333 million in assets, this fund is bigger than the others listed here, yet it's still small enough to move stealthily in and out of its large-cap holdings, which recently included BP, Vivendi Universal and Credit Suisse. Annual expense ratio: 1.42%. Three-year annualized total return through March 31: 35.7%. www.icapfunds.com (http://link.bls.bottomlinesecrets.com/h/SP69/62K1/VU/ONO8D)
Tocqueville International Value (TIVFX). This $260 million fund isn't flashy -- nearly 60% of its assets recently were invested in industrial materials and consumer goods manufacturers, such as Akzo Nobel and Unilever. Annual expense ratio: 1.66%. Three-year annualized total return through March 31: 38.3%. www.tocquevillefunds.com (http://link.bls.bottomlinesecrets.com/h/VLCF/62K1/VU/ONO8D)
Janet M. Brown
DAL Investment Co.
http://www.bottomlinesecrets.com/images/drop_caps/blue_y.gif ou really can't complain about the performance of US stocks over the past three years -- the S&P 500 Index was up an average of 17.2% a year through March 31. But in the same period, foreign markets (as measured by the MSCI EAFE Index) rocketed, returning an average of 31.1% a year. So is it time to take your profits in foreign stocks or funds and redeploy the money into the lagging US market? Many advisers may think so, but not Janet Brown, as she explains here...
We operate on the premise that recent performance is what matters most. The typical cycle for stock sectors is four to five years. As long as a fund is performing among the top third of other funds with similar risk characteristics, it's worth holding on to.
Our model fund portfolio is now more than 50% in international funds. That may seem extreme to many American investors, but consider that non-US stocks account for 60% of worldwide market capitalization. By that measure, we're underweighted in foreign stocks.
With the continuing globalization of the world's economies, there's not as much extra risk in foreign stocks as there used to be. Transparency -- the existence of rules and regulations that give investors a window into accounting and corporate decision making -- has gotten better globally, even in emerging markets. And those markets now supply the world, accounting for 70% of the global output of manufactured goods. For these reasons, we believe that at least 25% of a typical US investor's stock portfolio should be in foreign markets today.
If you want to invest in international funds with relatively low risk, consider the following four no-load choices. All are solid performers with volatility ratings equal to or less than that of the broad US market, and all have been doing very well of late. These funds also are relatively small, which gives them a nimbleness that is not possible with much larger funds.
Wright International Blue Chip Equities (WIBCX). This $126 million fund invests in large companies, such as Royal Dutch Shell and ING. It recently was about 50% invested in continental Europe, 25% in the Pacific region and 17% in the UK.Annual expense ratio: 1.62%. Three-year annualized total return through March 31: 30.3%. www.wisi.com (http://link.bls.bottomlinesecrets.com/h/62KH/62K1/VU/ONO8D)
JohnsonFamily International Value (JFIEX). This fund, with $98 million in assets, is less volatile than most similar funds, thanks to its value orientation.Annual expense ratio: 1.41%. Three-year annualized total return through March 31: 29.5%. www.johnsonfamilyfunds.com (http://link.bls.bottomlinesecrets.com/h/8ZY8/62K1/VU/ONO8D)
ICAP International (ICEUX). With $333 million in assets, this fund is bigger than the others listed here, yet it's still small enough to move stealthily in and out of its large-cap holdings, which recently included BP, Vivendi Universal and Credit Suisse. Annual expense ratio: 1.42%. Three-year annualized total return through March 31: 35.7%. www.icapfunds.com (http://link.bls.bottomlinesecrets.com/h/SP69/62K1/VU/ONO8D)
Tocqueville International Value (TIVFX). This $260 million fund isn't flashy -- nearly 60% of its assets recently were invested in industrial materials and consumer goods manufacturers, such as Akzo Nobel and Unilever. Annual expense ratio: 1.66%. Three-year annualized total return through March 31: 38.3%. www.tocquevillefunds.com (http://link.bls.bottomlinesecrets.com/h/VLCF/62K1/VU/ONO8D)