For investors interested in diversifying their portfolios with European holdings, the best advice may be to look to the emerging markets of Eastern Europe, as opposed to the more developed economies of Western Europe.
A look at the best-performing European equity funds over the last one-, three-, and five-year periods (see tables below) show a list dominated by funds specializing in Russia and Eastern Europe.
In fact, looking at the top five funds for each of those time periods shows the same four funds appear each and every time: ING Russia, U.S. Global Accolade Eastern Europe, Metzler/Payden European Emerging Markets, and Third Millennium Russia.
However, Eastern European markets have not been immune to the global market downturn of 2008.