3 Best American Funds for International Stocks

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Domestic stocks are in the spotlight now with corporate earnings of U.S. companies mostly meeting or exceeding expectations. However, foreign stocks continue to lead American stocks in terms of performance.

AmericanFunds185Now is a good time to keep an eye overseas, and American Funds has a handful of outstanding international stock funds to consider for part of an overall diversification strategy.

In fact, foreign stocks as a whole are performing significantly better than domestic stocks in 2015. The MSCI ACWI Index is up 7.2% year-to-date, whereas the S&P 500 Index is up just 2.7%. This is partially attributable to a strong U.S. dollar, which makes for higher profits on large-cap foreign exporters.

That outperformance strengthens the case for diversifying with international stock funds now and for the long term. With this in mind, today we highlight a trio of American Funds that focus on international stocks.

Best American Funds: American Funds Europacific Growth (AEPGX)

AmericanFunds185American Funds Europacific Growth (MUTF:AEPGX) is as solid an international stock fund you can buy.

One of the strengths of the American Funds family of mutual funds is the funds’ depth of management, and Europacific Growth is no exception. While there is some turnover of managers, the team approach at American Funds often has a few managers with decades of experience.

For example, Robert Lovelace just came to the end of 20-year stint on the Europacific team, but Mark E. Denning, with more than 20 years management experience remains. Several other managers also have 10-plus years of tenure.

Performance is just as solid with 1-year, 3-year, 5-year, 10-year and 15-year annualized returns ranking above average compared to other funds in the large-growth foreign funds category.

As the name suggests, you’ll get a healthy dose of large-cap stocks with growth potential, investing in firms in the Greater Europe region as well as exposure to developed and emerging markets in Greater Asia.

AEPGX has a front-load of 5.75%, but some investors may qualify for price breaks or load-waivers. The expense ratio is low at 0.84% — or $84 for every $10,000 invested, and the minimum initial investment is just $250.

Best American Funds for International Stock: American Funds Smallcap World (SMCWX)

AmericanFunds185American Funds Smallcap World (MUTF:SMCWX) is only one of the best international stock funds in the American Funds group, and it even ranks among the best in the entire mutual funds universe.

Another example of a top-performing fund benefiting from a seasoned management team, SMCWX has an outstanding performance track record with promise for equally impressive future results.

The portfolio consists of primarily small- and mid-cap stocks from all around the world with some large-cap names thrown in for balance. It is important to note that the portfolio can hold U.S. stocks, and that the recent allocation to North American was close to 50%. Therefore, technically, the fund is best described as “world stock,” as opposed to foreign stock.

In this regard, Smallcap World can make an outstanding core holding for an aggressive portfolio. Performance is a highlight, with performance ranks for long-term returns ranging from top third to top 10 percentile for world stock funds. For the year-to-date the Smallcap World fund is beating 94% of category peers with an impressive gain of 9.8%.

SMCWX has a front-load of 5.75% but some investors may qualify for price breaks or load-waivers. The expense ratio is low for small-cap world stock funds at 1.07% and the minimum initial investment is just $250.

Best American Funds for International Stock: American Funds Intl Gr and Inc (IGAAX)

AmericanFunds185American Funds Intl Gr and Inc (MUTF:IGAAX) is an international stock fund with solid long-term appeal.

Like many other American Funds, IGAAX tends be a “low beta” fund, which means it doesn’t often lead its category or benchmark when foreign stocks are hot but it will typically lead when its style falls out of favor.

For example, in the past five years, 2011 and 2014 were negative for foreign stocks. Performance ranks were in the top 4th percent and 23rd percent of funds, respectively. However, year-to-date, when foreign stocks are jumping, IGAAX is near the bottom of the pile in performance rank.

In the big picture, the 5-year annualized return of 7.5% places IGAAX ahead of 76% of category peers. This low relative volatility combined with above-average long-term returns is attractive for buy-and-hold investors looking for international stock funds. Add in the experienced American Funds management team and you have an outstanding choice for a diversified portfolio of mutual funds.

IGAAX has a front-load of 5.75%, but some investors may qualify for price breaks or load-waivers. The expense ratio is low at 0.91% and the minimum initial investment is just $250.

As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/04/best-american-funds-international-stock-apegx-igaax-smcwx/.

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