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Fund Spy

A Tumultuous First Quarter for International-Stock Funds

Performance of international-stock funds in the quarter varied widely.

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International-stock funds faced a topsy-turvy investment environment in the first quarter of 2018. The year started off positively as the generally favorable macroeconomic, geopolitical, and corporate conditions of 2017 persisted. The MSCI ACWI ex USA Index returned 5.6% in U.S. dollar terms in January, while the French, German, Japanese, and several other developed exchanges posted mid-single-digit gains, and the Brazilian, Chinese, and a few other emerging markets earned somewhat higher returns.

But several factors roiled foreign markets in February and March, including rising concerns about inflation and interest rates around the world, growing worries about a trade war between the United States and China, and surfacing company-specific fears in the technology sector. Consequently, most international markets suffered mid- to high-single-digit losses during February and March, with the Brazil and Japanese exchanges performing somewhat better than that, and the Chinese and Indian markets faring slightly worse.

William Samuel Rocco has a position in the following securities mentioned above: VWILX, MACSX. Find out about Morningstar’s editorial policies.