The words “international” and “growth” have not been seen together in financial media much lately, at least not in a highly positive regard. But therein lies the opportunity for investors.
From a macro perspective, the world outside of the U.S. doesn’t exactly appear bright at the moment, but there are pockets of growth to be found if you know where to shine the light. Better yet, you can hire someone else to search the world for growth opportunities and buy one of the best international growth funds available today.
So for your convenience, I sifted through a pile of about 450 international growth stock funds and narrowed down to a list of three funds.
For the sake of clarity, these funds only included those that have a portfolio of at least 80% of holdings outside of the U.S. And each of the three finalists are actively managed funds with strong performance records and experienced managers with the skills to find the best international growth opportunities.
Here are the top three mutual funds to buy for international growth:
Mutual Funds to Buy for International Growth: Wasatch International Opportunities Fund (WAIOX)
If you want to find the best growth opportunities in the world, you need to be good at researching and selecting the best small-cap names and one of the best mutual funds that can do this is Wasatch International Opportunities (WAIOX).
As one of the best small-cap mutual fund shops in the world, Wasatch extends its expertise to international growth stocks. For example, Wasatch first bought India’s Amara Raja Batteries Ltd in 2011 and the price appreciation in just the past three years is nearly 700%.
The Wasatch International management team has also found growth opportunities in diverse group of countries, including South Africa, Singapore, Philippines, and Denmark.
Performance in 2014 places WAIOX in the top 1% among all other foreign small/mid growth funds. The three and five-year performance ranks are also impressive and in the top quartile.
The expense ratio of 2.25% is on the high side ($225 per $10,000 invested) but you get what you pay for in the form of top research to find small-cap international growth opportunities.
The minimum initial investment to buy WAIOX is $2,000.
Mutual Funds to Buy for International Growth: Fidelity International Capital Appreciation (FIVFX)
One of the best all-around international growth mutual funds in Fidelity International Capital Appreciation (FIVFX).
Since taking the helm in the beginning of 2008, manager Sammy Simnegar has made FIVFX a solid international growth fund with a combination of boldness and confidence. Big bets in sectors, such as consumer cyclicals, industrials, and financials have paid off.
Top holdings include strong large-cap names like Denmark’s Novo Nordisk A/S ADR (NVO) and South Africa’s Naspers Ltd.
If history at least provides a significant clue about future performance, Simnegar’s management will continue its international growth leadership. The one-, three- and five-year returns are all comfortably in the top 5% rank among foreign large growth peers.
To help keep wind in the sails of performance, the expense ratio of 1.14% is a bargain for strong management.
The minimum initial investment to buy FIVFX is $2,500.
Mutual Funds to Buy for International Growth: Vanguard International Growth Fund Investor Shares (VWIGX)
If you are looking for solid, low-cost, consistent international growth fund, you’ll like Vanguard International Growth (VWIGX).
VWIGX has a rich 33-year history of producing above-average returns. Although Vanguard added sub-advisors in 2014, the lead fund manager, James K. Anderson, has been at the helm for more than a decade and the performance record is impressive.
The 10-year performance rank places Vanguard International Growth in the top 30% and returns in the short- to intermediate-term periods are also outstanding. The fund also outperforms its benchmark, the MSCI ACWI ex USA Index for the three, five-, 10- and 15-year periods.
Current regional exposure has nearly 60% of portfolio holdings in Greater Europe with about 35% in Greater Asia. Top holdings include China’s Baidu Inc ADR (BIDU) and Switzerland’s Roche Holding Ltd.
Vanguard International Growth’s expense ratio of 0.47% is low for an international stock fund and the minimum initial purchase amount is $3,000.
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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