Stock Market Strategies Booklet, How to Invest, Bonds, Mutual Funds, Strategic Money Planning
Big Returns in a Small (Stock) World Foreign Funds That Focus On Midsize and Tiny Firms Prove Almost Too Popular. In international investing, small is beautiful - at least for the time being. With mutual-fund managers scouring the globe for a potential Google Inc, of Germany, or a future Pfizer Inc. of India, midsize stocks have been on a tear. Considering that most foreign-fund categories have been stellar performers, international small stocks still stand out. These funds boat an average annual return of 39% during the past three years, compared with a 29% return for international funds that focus on large companies, according to fund tracker Morningstar Inc., of Chicago. On a five-year basis, the 59 foreign small-stock funds tracked by Morningstar returned an average 16% a year, better than the 9% from international large-stock funds. Analysts warn the landscape is changing. In a sign of how much money has poured into funds, a dozen of the top 25 performing international small-stock funds identified by Morningstar no longer let new investors buy shares. Some financial advisers see this as ominous. Fund managers typically close their doors when the amount of money they have becomes so large that they have difficulty maintaining their original investment strategy. International small and midsize stocks - companies averaging about $1.8 billion in market value and usually less than $5 billion - have seen their prices rise so fast that most analysts say they are no longer cheap, and many find them expensive. Because there is less information available about small stocks, they tend to be riskier and more susceptible to unanticipated big moves.
Read more > March 31, 2008, 7:37 pm