FMI International Joins the Kiplinger 25
The concentrated overseas fund replaces Dodge & Cox International Stock, which recently closed to new investors.
Out with the old, in with the new. In line with our policy, we are, with great regret, removing Dodge & Cox International Stock (symbol DODFX) from the Kiplinger 25, the list of our favorite no-load mutual funds. International Stock has been a stellar performer since joining the Kip 25 in May 2005. As its replacement, we have chosen FMI International (FMIJX).
Why do we like FMI International? Let’s start with the record. From 2011 through 2014, International’s first four full years of operation, it landed in the top 2% of its category twice and in the top 12% once. In the fourth year, it was in the middle of its group (funds that focus on large foreign firms with a blend of growth and value attributes). From International’s launch on Dec. 31, 2010 through Jan. 30, 2015, the fund returned an annualized 11.4%, beating the MSCI EAFE index by an average of 6.2 percentage points per year. And it did so with about 40% less volatility than the benchmark.
International’s nine managers, employees of Milwaukee-based Fiduciary Management, run two other standout funds: FMI Common Stock (FMIMX), which focuses on small and midsize U.S. companies, and FMI Large Cap (FMIHX). Both funds boast 10-year returns that rank among the top 4% of their peers (and both are closed to new investors).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
FMI manages trim portfolios. International, for example, holds just 30 stocks. The ideal holding is a large, well-established firm that has a sustainable competitive advantage over its rivals and a business that can survive the ebbs and flows of the economic cycle. The final ingredient: A stock needs to trade for less than what the managers think a company is worth. But International isn’t a deep-value fund, says comanager Pat English, who is also FMI’s CEO and chief investment officer. “We want the businesses healthy, growing and sound.”
The process tends to eliminate certain sectors at any given time. These days, that would include utilities and energy and other commodity-related industries. “We’re not bottom-fishers,” says English. “That’s not our cup of tea.” Though energy stocks have taken a licking since last summer, English says the sector is not attractive long-term because it’s held hostage to the vagaries of oil prices.
The managers are also cool on health care, including biotech stocks, in part because the stocks have run up so much. Over the past year, they shed the fund’s two holdings in the sector: Ireland-based Covidien, after Medtronic (MDT) acquired it, and GlaxoSmithKline (GSK) after deciding that the British drugmaker “dropped the ball” on some of the products it was developing. The fund now holds no health care stocks.
Even with the short list of names in the portfolio, English says, the fund is plenty diversified. “We diversify by industry,” he says. Also, most of the holdings are multinational businesses—such as business-consulting firm Accenture and Genting Malaysia Berhad, an Asian hotel and gambling resort company—and that offers another level of diversification. “We own durable, all-weather vehicles,” says English.
International has at least two other pluses. First, six of its nine managers have invested at least six figures of their own money in the fund. “We eat our own cooking,” says English. Plus, expenses are reasonable, at 1% per year. That’s about 20% less than the average fees for diversified foreign-stock funds. The minimum initial investment is $2,500.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical Tension
The main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
By David Dittman Published
-
What's at Stake for Alphabet as DOJ Eyes Google's Chrome
Alphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
By Joey Solitro Published
-
The Kiplinger 25: Our Favorite No-Load Mutual Funds
The Kiplinger 25 The Kiplinger 25 is a list of our top no-load mutual funds that have proven capable of weathering any storm.
By Nellie S. Huang Last updated
-
The 5 Best Actively Managed Fidelity Funds to Buy Now
mutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
By Kent Thune Last updated
-
The 12 Best Bear Market ETFs to Buy Now
ETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
By Kyle Woodley Published
-
Don't Give Up on the Eurozone
mutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
By Rivan V. Stinson Published
-
Best Bond Funds to Buy
Investing for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
By Jeff Reeves Last updated
-
Vanguard Global ESG Select Stock Profits from ESG Leaders
mutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
By Rivan V. Stinson Published
-
Kip ETF 20: What's In, What's Out and Why
Kip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
By Nellie S. Huang Published
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.
Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
By Nellie S. Huang Published