3 Superior Core Foreign Stock Funds
These funds provide broad exposure to stocks outside the U.S. and are still open to new investors.
Susan Dziubinski: Hi, I'm Susan Dziubinski for Morningstar.com. Finding a good international stock fund is easier said than done. Ideally, you want a fund that provides exposure to foreign large-caps with both growth and value characteristics and some smaller companies and emerging-markets stocks thrown in for good measure. However, many of the best funds that do all of those things--including Oakmark International, Artisan International Value, and Dodge & Cox International Stock--are closed to new investors. Yet there are other funds that can fit the bill. Here are some of Morningstar's favorite funds in the foreign large-blend category that are accepting money from new investors.
Gregg Wolper: American Funds International Growth and Income is an unusual fund in the American Funds family for two reasons. One is its size. At $14 billion it's actually a pretty big fund. But in the American Funds context, that's much smaller than most siblings. It also has an income focus which is unusual not only in American Funds but in foreign funds in general. That income focus helps make it less volatile than most funds. On the foreign side, you don't get an income focus very much. That restricts their stock-picking to less volatile stocks, makes the fund easier to own over the long term. Like most American Funds, it also has a multi-manager structure. The departure of any one manager is not as critical as it would be at a sole manager fund. Finally, it has very low fees. Of course, that helps year-after-year. All in all, it's a very appealing package.
Dan Sotiroff: One of our favorite foreign stock funds is Vanguard Total International Stock Fund. This fund provides comprehensive access to the entire investment opportunity set overseas including both developed and emerging markets. It also provides investors with access to small-cap stocks listed overseas. Small-cap stocks have a unique characteristic in that their revenues and operations tend to be more closely tied to the local markets. They can offer a big diversification benefit that large-cap funds do not have. Another major attractive feature of this fund is its low expense ratio. Vanguard charges only 11 basis points for VTIAX, and it's one of the big reasons we have this fund rated Gold.
Alec Lucas: FMI International is a compelling option to add to a portfolio for exposure to international stocks. It's run by Fiduciary Management Incorporated of Milwaukee, a firm with a good track record of investing in undervalued stocks and doing so in a pretty concentrated way. What's unique about this fund is that it hedges its exposure to non-U.S. currency. It gives the portfolio a bit of a boost when the U.S. dollar surges relative to non-U.S. currencies as it has in 2018 and it can be a headwind when the U.S. dollar retreats as it was in 2017. Over a full market cycle, this is a very attractive option to add to a portfolio.
Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.