Are Foreign Markets Due for a Comeback?

March 24, 2015

moneylifeshow-imageForeign markets led from 2003 to 2007, but since then, U.S. markets have usually done better. Are foreign funds due for a comeback?

This was one of the questions FundX CIO Jason Browne discussed in his recent appearance on the MoneyLife Show with Chuck Jaffe.

Click below to listen to Jason’s full interview.

“People have been waiting for foreign to come back into favor for the last couple of years, and there’s a lot of logical reasons why…sooner or later, you expect to see that rebound take place,” Jason said. “But our philosophy is to wait for it to happen.”

We don’t try to forecast future market leadership. “We always expect to see rotations [of market leadership], but we have no idea when it’s going to happen or how big of a change it will be in our portfolios,” Jason said.

In the last few years, our portfolios have been mostly concentrated on domestic funds because these funds have been bringing in the best returns. “We don’t have anything against foreign investments,” Jason said, noting that we’d held foreign funds from 2003 to 2007. “We just wait for them to come up our ranks and then we buy.”

Two foreign funds have come up the ranks, Jason said. On the speculative side, Jason pointed to Matthews India (MINDX), a fund that “has done exceptionally well.” But he explained that “it is a volatile fund and a small part of our portfolio.”

Investors who are looking for more of a core holding could consider PIMCO International StocksPLUS (PIPDX), a strong-performing diversified fund. “It’s done better than most of the diversified foreign funds we track, and many of the domestic diversified funds at this point,” Jason said.

Other international portfolios may be worthy funds that are simply out of favor. We don’t believe in buying such funds and waiting for them to come back. As Jason said, “there are so many opportunities right now that are doing better.”

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