Foreign Funds You Can Stick with for the Long Haul
Steep losses have investors worried, but we think these funds are still top choices.
If your international funds' staggering losses in 2008 have left you feeling a little ill, you're not alone. On average, diversified foreign large- and small/mid-cap focused funds have posted losses from 41% to 48% for the year to date ended Nov. 6, 2008. These steep drops have erased the red-hot gains of the past few years and have presumably prompted many investors to sell their international fund shares.
Given the volatility in this asset class, we crafted a screen that seeks funds that have performed well overall through both bull and bear markets. We focused on the five foreign diversified fund categories that own large- and small/mid-cap stocks. Performancewise, we selected those with top-third 10-year category rankings, in addition to top-quartile showings in 2008. In terms of risk, we narrowed it down to funds that have achieved low, below-average, or average Morningstar Risk ratings. This measure assesses variations of monthly returns compared with similar funds over the three-, five-, and 10-year periods, penalizing funds with more downside risk because investors are particularly sensitive to absolute losses. Lastly, we set the screen to pull funds that are open to new investment and which also sport reasonable price tags.
Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.