Last year was a turbulent one for many investors. Ironically, those who bought the riskiest types of mutual funds did best:
* International stock funds (average returns of 15.57 percent, according to Morningstar) did much better than domestic stock funds (6.35 percent).
* Specialized foreign stock funds, considered to be the most perilous, performed best. Leaders were Pacific and Asia funds that don’t invest in Japan (up 47.53 percent), Latin American funds (up 45.77 percent), and diversified emerging markets funds (36.68 percent).
* Some sector funds also had big years, especially those in volatile areas. Natural resources funds (which focus on oil companies) gained 37.12 percent and precious metals funds, which invest in gold mines, were up 23.19 percent.
* Among the losers were funds specializing in financial firms such as banks (-11.64 percent) as well as real estate funds (-14.66 percent). Japanese stock funds also lost 9.10 percent.
Going forward, it might be time to trim allocations to foreign stock funds, which have far outpaced domestic funds over the past 3, 5, and 10 years.
