A portfolio without foreign stocks would be like "fighting an investment battle with one arm tied behind your back," says Jed Weiss. He's biased, of course, as manager of Fidelity International Growth (FIGFX) fund. But he has a point: Foreign stocks make up about half of the global stock market.
Over the past 12 months, International Growth, a member of the Kiplinger 25, gained 28.7%, trailing the 30.9% return of the MSCI EAFE Index, which tracks foreign stocks in developed countries. The fund shone for most of the year, but November and December were a challenge.
That's not surprising: The fund tends to thrive during stretches of market uncertainty, thanks to Weiss's penchant for what he calls share gainers – financially healthy companies with strong positions in their industry that can raise or keep prices steady even in troubled times. Semiconductor companies such as ASML Holding (ASML), Lam Research (LRCX), Lasertec (LSRCY) and Taiwan Semiconductor Manufacturing (TSM) were among the fund's big winners over the past year.
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.
But when the stock market makes a sharp upward turn, the fund typically lags. That's what happened in late 2020. The approval of two COVID-19 vaccines fueled a shift in market sentiment away from steady Eddies. As a result, some fund holdings that had done well earlier in the year suddenly became laggards, including Roche (RHHBY) and Nestlé (NSRGY), defensive businesses with strong balance sheets.
A Tilt Toward Survivors
Life is returning to normal now, and that bodes well for International Growth.
"The market has started to focus on firms that will come through this period stronger, and that's what my investment process is geared toward," says Weiss.
He's upbeat about luxury companies that have gained market share. "Not all did well," says Weiss. LVMH Moët Hennessy Louis Vuitton (LVMUY) is a top holding. Weiss sees opportunities, too, in hard-hit industries such as aerospace and commercial catering. Earlier this year, he picked up shares in the U.K. catering company Compass Group (CMPGY).
Weiss's focus on market-share gainers has served investors well. The fund's five-year annualized return, 14.3%, beat the 10.6% annual return of the MSCI EAFE Index.
-
White House Probes Tracking Tech That Monitors Workers’ Productivity: Kiplinger Economic ForecastsEconomic Forecasts White House probes tracking tech that monitors workers’ productivity: Kiplinger Economic Forecasts
-
The Kiplinger 25: Our Favorite No-Load Mutual FundsThe Kiplinger 25 The Kiplinger 25 is a list of our top no-load mutual funds that have proven capable of weathering any storm.
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual 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.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Investing in Emerging Markets Still Holds PromiseEmerging markets have been hit hard in recent years, but investors should consider their long runway for potential growth.
-
Don't Give Up on the Eurozonemutual 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.
-
Stocks: Winners and Losers from the Strong DollarForeign Stocks & Emerging Markets The greenback’s rise may hurt companies with a global footprint, but benefit those that depend on imports.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
