Investors have different reasons to own international stocks in their portfolios, Susan Dziubinski, director of content at Morningstar.com, writes in a recent blog post.
Some investors want foreign stocks to round out their exposure to the global stock market. Others may want to tilt their portfolios toward foreign stocks after a period of U.S. stock dominance.
Dziubinski says it is important for investors to ensure that they do not already have enough exposure to international markets through their core equity fund holdings, noting that Morningstar’s Instant X-Ray can help determine a portfolio’s international stock stake.
She acknowledges that there is no “right” allocation to foreign markets. However, Morningstar’s Lifetime Allocation Indexes suggest that up to a 41% position in non-U.S. stocks, depending on life stage and glide path.
Dziubinski presents a shortlist of the best foreign-stock mutual funds and exchange-traded funds — those funds with at least one share class earning a Morningstar analyst rating of Gold — for ideas to investigate further.
“Regardless of whether an investor goes active or passive, there are dedicated large-cap funds, focused small-cap funds and wide-ranging all-cap funds practicing different growth and value strategies,” she writes.
“Understanding a fund’s Morningstar Style Box placement and its strategy allows investors to find funds that match their risk profiles, fill portfolio gaps and set performance expectations.”
See the gallery for the 25 funds — which are listed in alphabetical order — on Morningstar’s latest list.