Adventurous, Successful Foreign Funds
These diversified funds don't shy away from emerging markets.
One prediction Morningstar analysts have heard repeatedly from fund managers over the past few months is that future economic growth is likely to be more robust in developing countries than in the United States, Europe, and Japan. But investing in emerging markets typically requires enduring a lot of volatility (which can shake investors out of funds at the wrong time), and it wouldn't be prudent to simply give up on the developed world. For those reasons, a diversified foreign-stock fund that's willing to venture into emerging markets in a substantial way and boasts plenty of fundamentally appealing attributes can be a good way to get exposure to those areas.
In order to identify foreign funds that don't hesitate to look outside of their traditional hunting grounds, we fired up the Morningstar Premium Fund Screener on Morningstar.com. We set the screener to seek out distinct portfolios of international funds that Morningstar fund analysts deem to be core holdings or supporting players in a portfolio (thus excluding volatile niche funds) and that have a recently published analysis. We also wanted funds that recently stashed at least 20% of their assets in emerging-markets stocks--but not more than 50%, in order to exclude funds that focus on emerging markets. Additionally, the screener was set to identify funds where the manager has been on the job for at least five years and outpaced two thirds of the fund's rivals over that span. Finally, we wanted only those funds with below-average expense ratios and a required minimum investment of no more than $10,000 that are open to new investors.
This screen yielded four funds as of March 1, 2010. Click here to run the screen yourself.
Greg Carlson has a position in the following securities mentioned above: DODFX. Find out about Morningstar’s editorial policies.