Fears that the U.S. economic growth is slowing prompted many investors to return to international mutual funds, helping revive their performance in the third quarter, The Wall Street Journal reports.
Except for funds that invest in Japan, all international mutual funds posted gains in the quarter, the biggest winners being emerging-markets funds, which rose an average of 4.4%, according to preliminary Lipper data. Asian ex-Japan and Latin American funds did particularly well, rising 5.3% and 3.5%, respectively.
Other strong regions were European funds, which posted gains of 4.2%, and China funds, up 3.8%.
International large-cap funds rose 3.2% in the period, compared to U.S. large-cap funds’ rise of 5.3%.
“Earnings at a lot of these emerging-markets companies continued to be strong, so that provided support,” noted Arijit Dutta, an analyst with Morningstar. Many emerging-markets countries export commodities, and with prices of many commodities remaining high, that also fueled growth in the region, Dutta added.
However, in the near term, he is cautious on emerging markets, pointing out how a sharper U.S. economic downturn than expected could lead to corrections in stock prices abroad, as well as geopolitical concerns.
“Going forward, I think we’re going to see a lot of volatility,” agreed Emery Brewer, portfolio manager of the Driehaus Emerging Markets Growth Fund.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.