We've all heard the saying, "What goes up must come down," and that is precisely why fund managers are becoming increasingly cautious on foreign small-cap stocks, MarketWatch reports.

For the past several years, small- and mid-cap foreign stock mutual fund returns were impressive, as they rose by an annualized 40.7% over a period of three years, according to Morningstar. This is precisely why a growing number of portfolio managers are becoming cautious about these stocks.

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