Top Foreign Investment Funds: Where To Invest Internationally

Foreign investment funds are an attractive option for investors who want to diversify their portfolios and gain exposure to international markets. These funds can provide access to stocks from outside the US market, particularly in developed markets such as Japan, Germany, France, Australia, and the UK, as well as emerging markets like China, India, and Brazil. International index funds that follow a passive investment approach provide a cost-effective means of investing overseas, but they also carry their own risks, including currency fluctuations and political issues. When considering the best foreign investment funds, it is important to research various factors such as minimum investment requirements, expense ratios, and performance compared to benchmarks. Here are some of the top-rated foreign investment funds according to sources such as Morningstar, U.S. News, and Investopedia:

Foreign large-growth funds

When considering foreign large-growth funds, investors should be aware of the benefits and risks associated with international investing. One advantage is diversification, as it spreads investment risk across a wider pool of companies and markets. Additionally, investing in foreign large-growth funds can provide exposure to industries and sectors that may be underrepresented in the US market.

However, international investments also carry unique risks. One key consideration is the fluctuation of currency exchange rates, which can impact investment returns when translated back into US dollars. Political, economic, and social events in foreign countries can also influence investment outcomes and may be more challenging to obtain comprehensive information about.

It is important for investors to thoroughly research and understand the specific details of each foreign large-growth fund before investing. This includes evaluating the fund's historical performance, fees and expenses, investment strategy, and the industries or regions it focuses on. Additionally, investors should be mindful of the potential tax implications and withholding taxes on dividends associated with international investments.

By carefully considering these factors and conducting due diligence, investors can make informed decisions about investing in foreign large-growth funds, allowing them to capitalize on international growth opportunities while effectively managing the associated risks.

Foreign small/mid-blend funds

Mutual Funds

• Fidelity® International Small Cap Fund: This fund seeks capital appreciation by investing primarily in non-U.S. securities.
• DFA International Small Company Port: This fund seeks long-term capital appreciation.
• Invesco EQV International Small Com Fd: This fund seeks long-term capital growth by investing at least 80% of its net assets in non-U.S. securities.
• Nuveen International Sm Cp Fund: This fund seeks long-term capital appreciation by investing at least 80% of its net assets in non-U.S. securities.
• SA International Small Company Fund: This fund seeks long-term capital appreciation by investing in the International Small Company Portfolio.
• Transamerica International Small Cap Val: This fund seeks maximum long-term total return by investing at least 80% of its net assets in non-U.S. securities.
• Voya Multi-Manager International SmCp Fd: This fund seeks maximum long-term capital appreciation by investing at least 80% of its net assets in non-U.S. securities.
• JHancock International Small Company Fd: This fund seeks long-term capital appreciation by investing at least 80% of its net assets in non-U.S. securities.
• Nationwide International Small Cap Fund: This fund seeks long-term capital growth by investing at least 80% of its net assets in equity securities of small-cap companies.
• Lord Abbett International Opps Fd: This fund seeks long-term capital appreciation by investing in stocks of companies principally based outside the United States.

Exchange-Traded Funds (ETFs)

• Vanguard FTSE All-Wld ex-US SmCp ETF: This ETF seeks to track the performance of the FTSE Global Small Cap ex U.S. Index, which measures the investment return of international small-cap stocks.
• Schwab International Small-Cap Eq ETF™: This ETF aims to track the total return of the FTSE Developed Small Cap ex U.S. Liquid Index.
• IShares MSCI Intl Small-Cap Mltfct ETF: This ETF seeks to track the STOXX International Small-Cap Equity Factor Index, composed of global developed market small-capitalization stocks.
• SPDR® S&P® International Small Cap ETF: This ETF seeks investment results corresponding to the total return performance of the S&P Developed Ex-U.S. Small Cap Index.
• IShares MSCI EAFE Small-Cap ETF: This ETF aims to track the investment results of the MSCI EAFE Small Cap Index, composed of small-capitalization developed market equities.
• IShares Currency Hdgd MSCI EAFE SmCp ETF: This ETF seeks to track the investment results of the MSCI EAFE Small Cap 100% Hedged to USD Index, composed of small-capitalization developed market equities.
• Avantis International Small Cp Eq ETF: This ETF seeks long-term capital appreciation by investing primarily in a diverse group of non-U.S. small-cap companies.
• Dimensional International Small Cap ETF: This ETF seeks long-term capital appreciation by purchasing a diverse group of international small-cap stocks.
• Hartford Multifactor InternationalSmCETF: This ETF seeks investment results corresponding to the total return performance of Hartford Multifactor Index.

Additionally, investing in international stocks can strengthen your portfolio through diversification and provide new avenues for explosive growth. International stocks can be an excellent component of your investment portfolio, especially considering the expanding global middle class and the world's most dramatic economic growth expected outside the United States.

Foreign small/mid-growth funds

Fidelity® Series International Sm Cap

This fund seeks capital appreciation by investing primarily in non-US securities, including securities of issuers located in emerging markets. It is ranked #1 in Foreign Small/Mid Growth funds.

American Beacon EAM Int Small Cap

Ranked #2 in Foreign Small/Mid Growth funds, this fund seeks long-term capital appreciation. Under normal circumstances, at least 80% of the fund's net assets are invested in equity securities.

MFS International New Discovery Fund

The MFS International New Discovery Fund, ranked #3 in Foreign Small/Mid Growth funds, seeks capital appreciation by investing primarily in foreign equity securities, including emerging market equities.

Harding Loevner Intl Small Coms Port

Ranked #4, this fund seeks long-term capital appreciation by investing in small companies based outside the US, including those in emerging and developed markets.

Brown Capital Management Intl Sm Co Fd

This fund, ranked #5, seeks long-term capital appreciation by investing at least 80% of its net assets in foreign equity securities.

Fidelity® International Small Cap OppsFd

Ranked #6, the Fidelity® International Small Cap OppsFd fund seeks capital appreciation by investing primarily in non-US securities, including those located in emerging markets.

Fidelity also offers other international investment opportunities, such as the Fidelity® Diversified International Fund (FDIVX), the Fidelity® Emerging Markets Fund (FEMKX), and the Fidelity® International Capital Appreciation Fund (FIVFX).

Foreign small/mid-value funds

Foreign small-/mid-value portfolios invest in international stocks that are smaller and less expensive than other stocks. These portfolios primarily invest in stocks that fall in the bottom 30% of each economically integrated market (such as Europe or Asia ex-Japan). Value is defined based on low valuations (low price ratios and high dividend yields) and slow growth (low growth rates for earnings, sales, book value, and cash flow). These portfolios typically will have less than 20% of assets invested in U.S. stocks.

Brandes International Small Cap Eq Fund

The fund seeks long-term capital appreciation. The fund invests at least 80% of its net assets measured at the time of purchase in equity securities, including securities of issuers located in emerging markets.

Causeway International Small Cap Fund

The fund seeks long-term growth of capital. The fund invests primarily in common stocks of companies with smaller market capitalizations located outside the U.S.

Pzena International Small Cap Value Fund

The fund seeks to achieve long-term capital appreciation. Under normal market conditions, the International Small Cap Fund invests at least 80% of its total assets in equity securities of small-cap companies located outside the U.S.

Moerus Worldwide Value Fund

The fund seeks long-term capital appreciation. The adviser pursues the fund's investment objective by investing primarily in foreign (including emerging markets) equity securities that the adviser believes are undervalued.

DFA World ex US Targeted Val Portfolio

The fund seeks to achieve long-term capital appreciation. The Portfolio is designed to provide exposure to a broad and diverse portfolio of securities of foreign small and mid-capitalisation companies in developed and emerging countries outside the U.S.

Harbor International Small Cap Fund

The fund seeks long-term growth of capital. Under normal market conditions, the fund invests at least 80% of its net assets, plus borrowings for investment purposes, in common stocks and depositary receipts of foreign small-capitalisation companies.

Free Market International Equity Fd

The fund seeks long-term capital appreciation. The fund normally invests at least 80% of its net assets, including any borrowings for investment purposes, in equity securities of non-U.S. small-capitalisation companies.

IShares Intl Dev Sm Cp Val Fctr ETF

The fund seeks to track the FTSE Developed ex U.S. ex Korea Small Cap Focused Value Index composed of international developed market small-capitalisation equities while mitigating exposure to securities of certain countries, sectors, or industries that do not meet certain environmental, social, and governance criteria.

Schwab Fundamental Intl Sm Co ETF

The fund seeks to track, as closely as possible, the total return of an index that measures the performance of small non-U.S. companies.

Invesco FTSE RAFI Dev Mkts ex-US S/M ETF

The fund seeks to track the investment results (before fees and expenses) of the FTSE RAFI TM Developed ex U.S. Mid-Small 1500 Index.

International index funds

• Legal & General International Index Trust: This fund aims to provide growth by tracking the FTSE World (ex-UK) Index. It invests primarily in a broad range of company shares from around the world, excluding UK companies. With ongoing charges of 0.10%-0.13%, it is one of the cheapest ways to track the world's stock market.
• Fidelity Index World Fund: This fund seeks to track the performance of the MSCI World (Net Total Return) Index, aiming to increase the value of investors' investments over a period of five years or more. It uses an 'index tracking' or 'passive' investment approach, replicating the composition of the index. The fund has a Morningstar rating of five stars and can be held in an Investment ISA, SIPP, or Investment Account.
• SPDR iShares MSCI ACWI ETF: This exchange-traded fund (ETF) invests around the world, including emerging markets. It is weighted by the market size of the world's major stock markets, with the largest chunk (65.4%) invested in the US. The UK makes up 3.3% of the ETF, while China and India account for 2.5% and 2%, respectively. It has a total expense ratio of 0.2%.
• Vanguard LifeStrategy Funds: These funds allow investors to choose their risk levels and hold a basket of assets that suits them, using primarily Vanguard passive funds across shares and bonds worldwide. The funds are cheap and simple, allowing investors to adjust their risk level from cautious (20% equities) to high risk (100% equities). However, investors should note that these funds skew towards the UK market, with about one-fifth of the equity proportions made up of a FTSE All Share tracker. The ongoing charges for these funds are 0.22%.

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