A larger percentage of stocks in a growing number of mutual fund portfolios are foreign, according to Morningstar. The fund tracker found that there are now more than 100 U.S. stock funds that consist of more than one-fifth of their portfolios in foreign securities, as fund managers follow the rising stars of the mutual funds, wherever they may be, The Wall Street Journal reports. A number of instruments of all types are trending toward foreign stock, says The WSJ, citing as example American Century Hedge Fund whose U.S. allocation has dropped from 93% early last year to 76%. Other instances, according to the paper, includeThird Avenue Value Fund, which has cut its U.S. allocation from 68% to 53%; the Wasatch Micro Cap Value Fund, which now allocate 70% to U.S. stocks, off from 86% in 2004; and the John Hancock Large Cap Equity Fund, which lowered its 97% U.S. allocation to 71%. It has told shareholders, however, that it will cap foreign fund allocations to 35%. Such moves to foreign funds apparently have paid off; according to The WSJ, as they helped lift performance of the John Hancock fund from its berth in the bottom 5% of its class to the top 5%. The paper did note, however, that adding more foreign stock in the funds could make it more difficult to evaluate a fund’s performance which is benchmarked against a U.S.-based market index.
Ironically, on the other side of the world, STANLIB, South Africa’s largest unit trust company, reports that international funds there are about half as popular as they were in 1998.
