Foreign Mutual Funds: A Little Love Lost Last Year

U.S. investors still love foreign mutual funds, but not as much as they did last year. According to TrimTabs, U.S. investors sent more than $68 billion to overseas offerings, more than double they spent at home. But in 2005, U.S. investors selected international funds in a 3-1 ratio. The attractive returns overseas may be a reason for the historically high foreign investments, and advisers continue to recommend them. But TrimTabs Chief Executive Charles Biderman suggested in a MarketWatch interview that U.S. investors are looking abroad with the belief that the “U.S. economy isn’t growing so fast.” Considering the strength of many of the market indicators, that may be a misperception. Only a decade ago, advisers were recommending a 10% to 12% allocation of assets abroad; today about 70% of new money is going over there.