Tuesday January 08, 2013
by Janet Brown, editor NoLoad Fund X (courtesy of Dick Davis Digest)
Foreign markets were out of favor for the past two years, but came roaring back in the third quarter of 2012.
One of the top performing diversified international funds to come up our ranks was Oakmark International (OAKIX), our top aggressive pick. For conservative investors, Matthews Asian Growth & Income (MACSX) is a relatively low volatility way to access to this leading area of the market.
Among international markets, Europe was one of the strongest-performing regions and OAKIX is primarily invested in developed European companies (67%).
The remainder of the portfolio is invested in stocks from Japan, Australia and Canada. The Fund has virtually no exposure to emerging markets—0.2% in Mexico.
OAKIX invests primarily in large-cap international companies that the fund’s managers believe have strong growth prospects but are undervalued. Financial stocks, which lagged in 2011, make up 29% of the fund’s portfolio.
To protect against currency risks, OAKIX’s managers have hedged some of the fund’s currency exposure. OAKIX is up 22.4% year-to-date through December 15, 2012.
Matthews Asian Growth & Income
Matthews Asian Growth & Income is one of the few Asia funds with market-level risk because it’s not solely invested in emerging Asian markets.
Instead, MACSX is widely diversified: it has 69% of its portfolio invested in developed Asian markets like Singapore and Hong Kong, and the remaining 31% is invested in emerging economies like China and India, which have strong growth prospects.
MACSX also may invest in countries outside Asia, such as Australia and the United Kingdom.
Another way MACSX attempts to manage risk is by holding both dividend-paying stocks and convertible bonds. Both contribute to the fund’s yield, which was 1.91% as of September 30, 2012. MACSX is up 24.8% year-to-date through December 15, 2012. MACSX has a redemption fee on shares held less than 90 days.
Learn more about this financial newsletter at Janet Brown's NoLoad FundX.