The U.S. stock market meandered through the past year, ending this May less than 3% ahead of the same date in 2022. The Japanese market, however, returned more than 15%. Even the war-troubled European market returned nearly 5%.
Global blend funds invest the world over, in both bargain-price stocks and faster-growing fare. The category has lagged the U.S. market recently, but some top-performing funds have maneuvered smartly through geopolitical challenges such as COVID and trade tensions.
The Jensen Global Quality Growth Fund (JGQSX) notched a 5% return in the year ending May 31, putting it in the top 10% of its category, according to research firm Morningstar. As the fund's name suggests, the managers are focused on two main factors: strong growth prospects and healthy finances, demonstrated by competitive advantages and good cash flows, says Allen Bond, a co-manager of the fund and head of research for Jensen.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Managers look for proven gems
The managers start by screening for companies that have achieved a return on equity (a measure of profitability) of at least 15% for the past 10 years, which generally limits them to large, well-established companies.
"We are not trying to find hidden gems that have yet to prove themselves as viable businesses," Bond says. Then, they zero in on companies with strong growth in free cash flow (cash left over after operating expenses and spending on assets such as buildings and equipment). Because of the focus on quality and growth, the average price-earnings ratio for fund holdings was about 23 recently, compared with a P/E of 19 for the S&P 500 Index. The concentrated portfolio held only 35 stocks at last report.
The fund's top holding is Dow stock Microsoft (MSFT), which gets about half of its revenue outside the U.S. Bond is bullish on the company's growing cloud-computing services. He also likes AstraZeneca (AZN), the European pharmaceutical giant, with some cancer and diabetes drugs in the pipeline that could boost sales.
The fund aims to make international stocks about 40% of its portfolio. Among its domestically focused holdings is blue chip stock UnitedHealth Group (UNH), which should benefit from higher demand for healthcare as the nation ages, says Bond.
The fund charges expenses of 1.25% annually, slightly above average for its category.
Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
The Me-First Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
Stocks Grind Up to New All-Time Highs: Stock Market TodayUnitedHealth stock led the Dow Jones Industrial Average amid increasing signs the labor market has not been well for months.
-
The 'Nothing Ever Happens' Market: How Stocks React (Or Don't) to Geopolitical EventsGeopolitical events – terrorist acts, wars or military intervention – can give stocks a jolt. But that doesn't mean your portfolio will take a long-term hit.
-
A Fidelity Fund Misses Out on Soaring Bank StocksThe Fidelity International Growth Fund has outperformed over the long term, but its lagging exposure to bank stocks has weighed on more recent returns.
-
Where is the Foreign Dividend Boom Headed?It's been a golden six months for foreign dividend stocks, but can any be relied on for predictable income going forward? Here are some options.
-
9 Warren Buffett Quotes for Investors to Live ByWarren Buffett transformed Berkshire Hathaway from a struggling textile firm to a sprawling conglomerate and investment vehicle. Here's how he did it.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages — until it wasn't.
-
Are There Opportunities to Invest in China?Opportunities to invest in China are plentiful and, arguably, shouldn't be ignored in the U.S. Here's where to look.
-
Dow Rips 846 Points to New All-Time High: Stock Market TodayFed Chair Jerome Powell seems ready to cut interest rates in the fall but will still rely on incoming economic data about inflation and employment.
