Six Great World-Stock Funds By Morningstar Investment Research
The world has gone global. Fund companies have torn down most regional breakdowns and instead have sector analysts who cross borders to get a better handle on their industries. Talk with a fund manager, and he will discuss the best companies with little regard to locale.
This is why world-stock funds make so much sense. The desire to keep things in tidy buckets is why some pass them up, however. American Funds is the one firm that has gathered a lot of assets in world stock but there are plenty of smaller world-stock funds. Here are six of the best.
Silver-rated Harding Loevner Global Equity (MUTF:HLMGX) has just $800 million in assets, though it is widely available in No Transaction Fee supermarkets. The fund is run by two lead managers, each of whom has three decades of investing experience. Ferrill Roll and Peter Baughan ply a focused blue-chip growth strategy that leads them to well-known names like Schlumberger (NYSE:SLB), Nike (NYSE:NKE), and Nestle. Health care and tech are the largest sectors, but the fund owns at least something in most industries. The fund has really made its name by holding up well in down markets like 2008. That owes to attention to debt, valuations, and quality. The fund boasts the lowest downside capture (75% for 10 years) of the six world-stock funds highlighted here.
Gold-rated American Funds Capital World Growth & Income (MUTF:CWGIX) is a massive $90 billion fund, but it looks for some of the same things that Harding Loevner does. It, too, seeks blue chips at decent valuations. However, it has an income demand that leads it to own more value stocks. The fund aims for pre-expense income near that of the MSCI World Index. Its 2.16% trailing 12-month yield is pretty good in this low-yield environment. With a big asset base, low costs, and a deep team, it's a good choice for people who want low-maintenance investments that don't change much.
Gold-rated American Funds New Perspective (MUTF:ANWPX) is growthier than its staid cousin, as it doesn't have any dividend requirements. Thus, it tends to do a little better in growth years. More impressive though is its consistency. It hasn't underperformed in a calendar year since 2005 and even then it was just a hair below median.
Gold-rated Oakmark Global (MUTF:OAKGX) is very much a blend fund. Clyde McGregor and Rob Taylor run a tight portfolio of just 43 stocks. They look for strong franchises at low valuations. The most striking thing about their portfolio, though, is how much is outside of the eurozone. The United States, Japan, and Switzerland dominate their portfolio with the likes of Oracle (NYSE:ORCL), Toyota Motor (NYSE:TM), and Credit Suisse (NYSE:CS). A focused portfolio means some rough years, like the 12% loss in 2011, but this fund's 10-year return is the best in the group.
Gold-rated Dodge & Cox Global Stock (MUTF:DODWX) marries the firm's best foreign and domestic ideas in an excellent portfolio. It isn't exactly the same as you would get from owning Dodge & Cox Stock (MUTF:DODGX) and Dodge & Cox International Stock (MUTF:DODFX), but it's quite close. Dodge & Cox simply does an excellent job at patient value investing. And it does so at the cheapest price among the six with a cost of just 0.69%.
Silver-rated Artisan Global Opportunities (MUTF:ARTRX) has the strongest growth bias of our six funds. It's run by Artisan's growth team, which has managed Artisan Mid Cap (MUTF:ARTMX) since 1997. This fund's lead manager is James Hamel, who also comanages Artisan Mid Cap and Artisan Small Cap (MUTF:ARTSX). Hamel has four comanagers, and Andy Stephens is the most senior investor of the group. Their approach is to look for companies with accelerating growth and clean balance sheets. Naturally, such attractive companies don't come cheap, and this fund does come with rather high valuations. Still, the fund has fared quite well since it was launched in 2008, and the growth team has produced excellent results since it was formed in 1997.
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