Skip to Content
Fund Spy

Moderate International Funds That Deserve More Attention

These funds should deliver solid long-term results with modest volatility.

Mentioned: , , , , , , ,

When looking back on an extraordinary year for global investors, one fact is impossible to miss: Aggressive foreign funds have handily outpaced more-reserved ones. Emerging-markets funds have gained more than 65%, and the two foreign small/mid-cap categories are in the 42% to 46% range for the year to date through Dec. 18, 2009. By contrast, foreign large-cap and world-stock funds have gained a more pedestrian, though still impressive, 28% to 35% this year.

As could be expected, the core international funds that pay lots of attention to emerging-markets or small-cap issues have left most of their category peers in the dust in 2009.  Masters' Select International (MSILX), which typically has relatively high stakes in the developing world and the mid-cap space, is ahead of the vast majority of its foreign large-blend rivals.  Janus Overseas (JAOSX), which is even more adventurous, leads the foreign large-growth category with a spectacular 74% return.

Such results might lead some investors to conclude that bold core international funds are preferable to tame ones. That's not necessarily the case. Daring foreign large-cap and world-stock funds tend to suffer oversized losses in sell-offs and considerable volatility overall. While Masters' Select International, Janus Overseas, and some other core international funds that delve fairly substantially into emerging-markets or small-cap issues have overcome the risks of such holdings and earned strong results over time, many such funds have not. And even the best of these bolder funds can be challenging to stick with because of their ups and downs.

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