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4 Best-Performing International Equity Funds of Q1
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Compared to the first quarter of 2018, international equity funds witnessed better growth in the first quarter of 2019. Improving macroeconomic and geopolitical conditions as well as healthy corporate earnings around the globe played a pivotal role in shaping up the international equity market in Q1. China, in particular, led the way in the developing world, courtesy of encouraging developments on the trade war front as well as China’s economic resilience.
Non-U.S. mutual funds provide excellent choices for those looking to diversify their investments across a wide range of foreign countries, including both emerging and developed nations. Thus, investing in non-U.S. mutual funds may prove profitable and more attractive than those with significant domestic exposure at this point.
Non-U.S. Equity Groups Led Gains in Q1
Given the improving investment climate across the globe, international equity markets performed well in the first quarter. Among the six non-U.S. style box Morningstar Categories, foreign large-growth category and foreign small/mid-growth category delivered the highest returns, edging up 12% and 11.7%, respectively in the period between Jan 1 and Mar 27.
In the first quarter, the Europe stock category increased 10.5% compared with Japan’s rally of only 8.1%. Notably, the Japan stock category lagged every other international stock category save for Latin American and Indian equity groups, which returned 4.1% and 3.4%, respectively. Not-so-surprisingly, China posted the biggest gain in the first quarter, returning 18.2%. This followed severe losses that the stock group suffered in 2018.
Trade War Optimism and Upbeat Economic Data from China
Per a report by Financial Times, trade negotiations between the United States and China are almost over. The report quoted executive vice president for international affairs at the U.S. Chamber of Commerce, Myron Brilliant as saying that almost 90% of the deal is done, but the last 10% is the hardest part, it’s the trickiest part and it will require trade-offs on both sides.”
Further, in a tweet on the morning of Apr 4, President Donald Trump stated that trade talks with China were “moving along nicely.”
Meanwhile, Caixin’s China services purchasing managers index, a measure of the Asian giant’s private sector performance, increased to 54.4 in March, a 14-month high. The rise was supported by increase in new export orders. Market watchers welcomed such developments. Also, China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for March increased to 50.8 from 49.9 in February. This was its fastest expansion in eight months.
4 Best Funds to Buy Now
Given such circumstances, we have highlighted four international equity mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Matthews China Dividend Investor (MCDFX - Free Report) fund seeks returns through income growth. MCDFX invests the majority of its assets in dividend-paying securities of those companies that are based in China. The fund not only invests in equity securities but also convertible debt instruments.
This Sector - China-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MCDFX has an annual expense ratio of 1.19%, which is below the category average of 1.63%. The fund has three and five-year returns of 17.9% and 10.8%, respectively.
MFS International Growth I (MQGIX - Free Report) fund aims capital appreciation by investing primarily in securities of foreign companies, which also comprise emerging market equity securities. The fund invests in companies it believes have above-average earnings growth potential.
This Sector – Non Us-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MQGIXhas an annual expense ratio of 0.90%, which is below the category average of 1.14%. The fund has three and five-year returns of 12.8% and 5.4%, respectively.
Fidelity International Capital Appreciation (FIVFX - Free Report) fund primarily invests in securities of foreign companies including those that operate in emerging markets. FIVFX seeks growth of capital for the long run. It measures the industry’s position as well as financial and market condition of each company before selecting investments. The fund focuses on acquiring securities of companies from different countries.
This Sector - Non Us-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FIVFXhas an annual expense ratio of 1.19%, which is below the category average of 1.66%. The fund has three and five-year returns of 11.1% and 6.1%, respectively.
T. Rowe Price Japan (PRJPX - Free Report) fund seeks capital appreciation for the long run by investing the majority of its assets in securities of companies based in Japan. PRJPX invests in various Japanese companies and industries, irrespective of their size.
This Sector - Japan - Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRJPX has an annual expense ratio of 0.95%, which is below the category average of 1.26%. The fund has three and five-year returns of 13.5% and 8.7%, respectively.
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4 Best-Performing International Equity Funds of Q1
Compared to the first quarter of 2018, international equity funds witnessed better growth in the first quarter of 2019. Improving macroeconomic and geopolitical conditions as well as healthy corporate earnings around the globe played a pivotal role in shaping up the international equity market in Q1. China, in particular, led the way in the developing world, courtesy of encouraging developments on the trade war front as well as China’s economic resilience.
Non-U.S. mutual funds provide excellent choices for those looking to diversify their investments across a wide range of foreign countries, including both emerging and developed nations. Thus, investing in non-U.S. mutual funds may prove profitable and more attractive than those with significant domestic exposure at this point.
Non-U.S. Equity Groups Led Gains in Q1
Given the improving investment climate across the globe, international equity markets performed well in the first quarter. Among the six non-U.S. style box Morningstar Categories, foreign large-growth category and foreign small/mid-growth category delivered the highest returns, edging up 12% and 11.7%, respectively in the period between Jan 1 and Mar 27.
In the first quarter, the Europe stock category increased 10.5% compared with Japan’s rally of only 8.1%. Notably, the Japan stock category lagged every other international stock category save for Latin American and Indian equity groups, which returned 4.1% and 3.4%, respectively. Not-so-surprisingly, China posted the biggest gain in the first quarter, returning 18.2%. This followed severe losses that the stock group suffered in 2018.
Trade War Optimism and Upbeat Economic Data from China
Per a report by Financial Times, trade negotiations between the United States and China are almost over. The report quoted executive vice president for international affairs at the U.S. Chamber of Commerce, Myron Brilliant as saying that almost 90% of the deal is done, but the last 10% is the hardest part, it’s the trickiest part and it will require trade-offs on both sides.”
Further, in a tweet on the morning of Apr 4, President Donald Trump stated that trade talks with China were “moving along nicely.”
Meanwhile, Caixin’s China services purchasing managers index, a measure of the Asian giant’s private sector performance, increased to 54.4 in March, a 14-month high. The rise was supported by increase in new export orders. Market watchers welcomed such developments. Also, China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for March increased to 50.8 from 49.9 in February. This was its fastest expansion in eight months.
4 Best Funds to Buy Now
Given such circumstances, we have highlighted four international equity mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Matthews China Dividend Investor (MCDFX - Free Report) fund seeks returns through income growth. MCDFX invests the majority of its assets in dividend-paying securities of those companies that are based in China. The fund not only invests in equity securities but also convertible debt instruments.
This Sector - China-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MCDFX has an annual expense ratio of 1.19%, which is below the category average of 1.63%. The fund has three and five-year returns of 17.9% and 10.8%, respectively.
MFS International Growth I (MQGIX - Free Report) fund aims capital appreciation by investing primarily in securities of foreign companies, which also comprise emerging market equity securities. The fund invests in companies it believes have above-average earnings growth potential.
This Sector – Non Us-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
MQGIXhas an annual expense ratio of 0.90%, which is below the category average of 1.14%. The fund has three and five-year returns of 12.8% and 5.4%, respectively.
Fidelity International Capital Appreciation (FIVFX - Free Report) fund primarily invests in securities of foreign companies including those that operate in emerging markets. FIVFX seeks growth of capital for the long run. It measures the industry’s position as well as financial and market condition of each company before selecting investments. The fund focuses on acquiring securities of companies from different countries.
This Sector - Non Us-Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FIVFXhas an annual expense ratio of 1.19%, which is below the category average of 1.66%. The fund has three and five-year returns of 11.1% and 6.1%, respectively.
T. Rowe Price Japan (PRJPX - Free Report) fund seeks capital appreciation for the long run by investing the majority of its assets in securities of companies based in Japan. PRJPX invests in various Japanese companies and industries, irrespective of their size.
This Sector - Japan - Equity product has a history of positive total returns for over 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRJPX has an annual expense ratio of 0.95%, which is below the category average of 1.26%. The fund has three and five-year returns of 13.5% and 8.7%, respectively.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>