Investing

The Three Best International Funds

Many investors give foreign stocks short shrift. Here are three ways to fill out your portfolio.

Let's begin with a conclusion: You probably need to invest more heavily in overseas stocks. Economic growth in the U.S. will lag the world average in 2007. European companies are cutting costs, boosting productivity and selling at more-attractive share prices. Japan has emerged from hibernation. Emerging markets remain a potent long-term investment theme. "I firmly believe the opportunities are going to be outside the U.S. in 2007 and beyond," says Robert Froehlich, chief investment strategist for DWS Scudder. "The single biggest problem today for investors is too few foreign stocks."

But it's not just that growth prospects and values are more attractive abroad. You need to diversify your currency exposure. The growth in the government's debt load and the expansion of our trade deficit with other nations leaves the dollar vulnerable as a store of value.

How much should you devote to international stocks? Keeping 20% of your stock holdings in foreign names is a good minimum.

U.S. investors can easily buy into such powerful foreign companies as Nestle, Diageo and Novartis. But for most investors, international funds are the way to go. Three in particular we consider outstanding:

Dodge Cox International Stock (DODFX; 800-621-3979). This relatively new (since 2001) offspring of a venerable fund family (see The Dodge Cox Mystique, Nov.) has been rock-steady. Every year its returns put it in the upper 40% among broad-based foreign funds. And it ranks in the top 10% over five years.

Julius Baer International Equity II A (JETAX; 800-387-6977). Julius Baer's first overseas fund hasn't had a below-average year among broad international funds in the past decade. It's now closed to new investors, but this fund, begun in May 2005, is run on almost the same principles and by the same pair of co-managers. Its stock-picking style is eclectic -- neither growth nor value dominates.

Artisan International (ARTIX; 800-344-1770). Mark Yockey's 11-year-old fund is oriented toward growth companies, and those sorts of stocks haven't led the pack in recent years. But Artisan is a perfect match with value-driven Dodge Cox International -- one or the other should usually be setting off Roman candles.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
7 Best Commodity Stocks to Play the Coming Boom
commodities

7 Best Commodity Stocks to Play the Coming Boom

These seven commodity stocks are poised to take advantage of a unique confluence of events. Just mind the volatility.
September 8, 2021
Stock Market Holidays in 2021
Markets

Stock Market Holidays in 2021

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2021.
September 2, 2021

Recommended

These 2 Emotional Biases Could Kill Your Retirement
Investor Psychology

These 2 Emotional Biases Could Kill Your Retirement

Are your emotions sabotaging your retirement plans? Some basic knowledge and careful introspection can go a long way toward avoiding major pitfalls.
September 20, 2021
Investment Strategies for the 4 Stages of the Economic Cycle
Markets

Investment Strategies for the 4 Stages of the Economic Cycle

The U.S. economy is cyclical in nature, surging ahead and pulling back in waves over time. Investors’ portfolios need to change with the rise and the …
September 19, 2021
Is a Target Date Fund Right for You?
investing

Is a Target Date Fund Right for You?

You're busy, and poring over investments is a pain. Wouldn't a target date fund be easier? Take a look at their pros and cons to see if incorporating …
September 14, 2021
Water Investing: 5 Funds You Should Tap
ETFs

Water Investing: 5 Funds You Should Tap

As the importance of water sustainability becomes ever more apparent, so too do the potential rewards of investing in water.
September 10, 2021