For investing in foreign stocks, most investors will be better off with a diversified international
fund. The main reason is cost: expense ratios tend to be higher with funds that invest in, say, Asia or
emerging markets. Top-rated (by Morningstar) funds include Fidelity International Growth & Income,
Julius Baer International Equity, and Schwab International MarketMasters.
For larger portfolios, a fund holding smaller foreign companies might be added. International small-cap
funds can be a nice complement to large-cap funds; this is an inefficient, under-followed asset class
so there may be more opportunities than in large-caps. Such funds might add to the non-correlation
benefits that investors receive from foreign holdings.
Many top small-cap foreign funds have closed to new investors. Among those still open are Tweedy,
Browne Global Value, Neuberger Berman International, and T. Rowe Price International Discovery.
