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Fund Spy

Nowhere to Hide: Foreign Funds Are Falling, Too

After years of superior results foreign funds are suffering, but we've been here before.

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I don't know about you, but I'm getting used to this: My U.S. stock funds are stinking. I don't like it, but I know in time, things will get better.

But what's up with foreign funds? From 2003 through most of 2007, foreign offerings easily outpaced U.S. ones, thanks in part to a weakening U.S. dollar (which helped as investment returns gained overseas were translated back into cheaper dollars) and surging emerging markets. The tide seems to have turned, though. Across the board, foreign funds have fallen a bit harder so far in 2008 than U.S. ones. And in fact, every single diversified foreign-stock offering (from the five categories listed below) is in the red. What gives?

Times Have Gotten Tougher for Foreign Funds, Too
Category

YTD
Return

One-Year
Return
Large Value-14.48-20.28
Foreign Large Value-13.35-16.71
Large Blend-12.84-15.66
Foreign Large Blend-13.31-14.17
Large Growth-12.43-11.03
Foreign Large Growth-13.53-12.31
Small Value-8.36-19.71
Foreign Small/Mid Value-13.49-22.53
Small Growth-12.69-16.43
Foreign Small/Mid Growth-14.89-20.09
* Returns through 07-21-08.

Bridget B. Hughes does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.