It wasn't easy to do, but while many foreign stock mutual funds have struggled with a variety of global woes over the past five years, a select group of managers found ways to outperform. Below, as part of our annual best-funds list, a look at 25 of the best foreign stock funds.
Westcore International Small-Cap (WTIFX)
- Managers: Jeremy Duhon and John Fenley
- Assets: $134 million
- Top holdings: IG Group, Credit Corp Group
Also See
- The Top 100 Mutual Funds
- The Two Faces of Janus
Westcore managers John Fenley and Jeremy Duhon like to point out that with 10,000 small-company stocks around the world to choose from, they've picked just 36. The best of these small fries tend to be "fast-growing companies that can endure a weak environment," says Fenley. Among the current favorites: German electronic-payments processor Wirecard, which has managed to increase its profits despite the gloomy mood among European consumers, and IG Group Holdings, a British financial-trading firm. These days, nearly half the fund is invested in industrial firms, says Todd Rosenbluth, a mutual fund analyst at Standard & Poor's Capital IQ. "That's a pretty heavy bet."
Calamos International Growth (CIGRX)
- Managers: John P. Calamos and Nick Calamos
- Assets: $556 million
- Top holdings: Novo Nordisk, ARM Holdings
John P. Calamos, a son of Greek immigrants, cut his teeth investing in convertible bonds. But he and his nephew Nick have, for a decade, shown a knack for finding small! -but-gro wing stocks -- and for knowing what to stay away from. One move that helped International Growth recently was the decision to avoid bank stocks, for example. "There's no way to get a handle on risks they're taking," explains Nick Calamos. He also worries that consumers in the U.S. and Europe are "tapped out" after years of overspending. So far, such instincts have paid off: Over the past five years, the fund has returned 28 percent.
Saturna Sextant International (SSIFX)
- Manager: Nick Kaiser
- Assets: $162 million
- Top holdings: Copa Holdings, Teck Resources
Methodology
SmartMoney asked Morningstar for a list of the top-performing funds over the past five years from four separate categories: U.S. Stocks, Foreign Stocks, Bonds and Alternatives. From there, we whittled down the list, eliminating funds that charge high annual expenses and have high minimum investments. We also wanted to highlight funds that any investor can get into, so we took out funds that are only available in retirement plans or are closed to new investors.
Nick Kaiser is charged with finding bargains all over the world, but investors could be forgiven for thinking of the manager as something of a homebody. While the average large-blend foreign fund has about 8 percent of its stocks in the Americas, Kaiser, who has run Saturna Sextant International since 1995, invests more than 40 percent of his fund's money here. Among the fund's largest bets: Toronto-Dominion Bank, Potash Corporation of Saskatchewan and miner Teck Resources, whose Vancouver, British Columbia, headquarters are about an hour's drive from Bellingham, Wash., where Kaiser was born and now works. What's to like about the great icy north? Kaiser praises Canada's relatively clean and stable politics, which he says makes it easier fo! r him to assess and judge the country's companies. Says the 65-year-old fund manager: "We have a conservative outlook." Kaiser also manages the Amana funds, which invest in accordance with Islamic law.
Thornburg Global Opportunities (THOAX)
- Assets: $308 million
- Top holdings: Google, Microsoft
Co-manager Vinson Walden eschews big macro-economic calls, focusing instead on finding growing businesses that, for one reason or another, trade at cheap prices. "We kiss a lot of frogs," he says, although they end up buying only a relatively few. The, portfolio of between 30-40 stocks had a tradition of trouncing rivals until the financial crisis, but it was crushed in 2008 down 48 percent. It's bounced back well, even with a brutal 2008, its performance puts it in the top 7 percent of all foreign stock funds over the past five years. These days, Walden sees opportunity in Brazil, where he thinks investors who've sent Brazilian stocks tumbling over the past year this year are overreacting to inflation worries. His picks: Brasil Foods and homebuilder Cyrela Brazil Realty.
Wasatch World Innovators (WAGTX)
- Assets: $86 million
- Top holdings: Apple, Mastercard, Visa
This fund holds its share of tech giants like Apple, Google and Intel. But ultimately, says Wasatch chairman Sam Stewart, he's just looking for "companies that are doing things in a new and better way." Stewart, a former academic, is no stranger to questioning authority. He founded the Utah-based company in 1975 after listening to famed finance professor Eugene Fama deliver a lecture suggesting investors couldn't beat the market. About a third of the fund's stocks are outside the technology and healthcare sectors. Among them: World Fuel Services, a company that's carved out a business as a middleman between oil companies and large oil consum! ers such as airlines and InnerWorkings, which handles printing needs of businesses. "It's not just innovative products, it's innovative business models," says Stewart.
| Name | Ticker | 1-Year Return (%) | 5-Year Average Annual Return (%) | Expenses per $10,000 |
| Aberdeen China Opportunities | GOPAX | -12.2 | 8.4 | 188 |
| Aberdeen Emerging Markets | GEGAX | -6.4 | 5.8 | 179 |
| Alger China U.S. Growth | CHUSX | -13.4 | 2.2 | 212 |
| Calamos International Growth | CIGRX | 3.8 | 4.0 | 167 |
| Encompass | ENCPX | -21.3 | 2.6 | 145 |
| Fidelity Advisor Emerging Asia | FEAAX | -10.3 | 8.2 | 140 |
| Fidelity Canada | FICDX | -6.7 | 3.1 | 89 |
| First Eagle Overseas | SGOVX | 1.3 | 3.8 | 117 |
| Henderson European Focus | HFEAX | -13.2 | 1.1 | 154 |
| ING Morgan Stanley Global Franchise Portfolio | IVGTX | 11.8 | 5.0 | 123 |
| Janus Global Research | JANGX | -2.3 | 2.8 | 100 |
| John Hancock Global Opportunities | JGPAX | -26.3 | 3.5 | 149 |
| Matthews Asia Growth Investor | MPACX | -8.8 | 3! .8 | < td align="left" valign="top">119|
| Matthews China Investor | MCHFX | -18.3 | 11.1 | 115 |
| Oakmark Global Select | OAKWX | -1.2 | 2.3 | 124 |
| Old Westbury Global Small & Mid Cap | OWSMX | -2.3 | 4.8 | 111 |
| Oppenheimer Developing Markets | ODMAX | -10.5 | 7.3 | 130 |
| Oppenheimer International Small Company | OSMAX | -12.1 | 1.2 | 122 |
| Saturna Sextant International | SSIFX | -4.8 | 2.3 | 103 |
| T. Rowe Price New Asia | PRASX | -7.4 | 8.6 | 96 |
| Thornburg Global Opportunities | THO! AX | -0.1 | 2.6 | 148 |
| Virtus Global Infrastructure | PGUAX | 10.6 | 3.1 | 133 |
| Wasatch World Innovators | WAGTX | 10.1 | 3.2 | 196 |
| Wells Fargo Advantage Emerging Markets Equity | EMGAX | -6.7 | 6.9 | 189 |
| Westcore International Small-Cap | WTIFX | 2.6 | 2.8 | 150 |
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