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Global gains: Top 15 international equity funds Add to ...

What are we looking for?

The best money-making opportunities in developed markets beyond this continent.

 

The screen

We searched for the top 15 annualized returns in international equity funds for the year ended June 30, 2013.

U.S. dollar, segregated and duplicate versions were excluded, as well as those closed to new investors or with minimum investments over $25,000.

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These funds invest mainly in developed markets outside of North America and don’t fall into other geographic equity categories.

 

What did we find?

Pockets poised for growth around the world, and companies that have made gains ahead of economic improvement.

All of the top 15 funds had returns of at least 23 per cent in the last year.

While Europe may be the part of the world with the greatest economic hurdles right now, it may also hold the greatest chances for returns, according to Peter Moeschter, executive vice-president of Templeton Global Equity Group and portfolio manager of the Templeton EAFE Developed Markets Fund. His fund gained 28.5 per cent in the year to June 30.

Mr. Moeschter looks to buy stocks that aren’t favoured by investors, taking a five-year view on each business cycle.

Right now, the fund is heavily weighted toward Europe – particularly the U.K., France and Germany because the markets have been hit hard.

Sometimes, the timing isn’t quite right. “We did get hurt a bit in that we were buying some of these more distressed companies a bit early. It’s very tough to time it down to the month,” he said.

The strategy has gained traction in recent months, but the slowly expanding euro zone is still in its early stages of recovery from its double-dip recession.

But Mr. Moeschter stresses that he’s buying companies, not countries.

Right now he likes Japanese auto makers Toyota Motor Corp. and Mazda Motor Corp., the latter of which is on the rebound, having done an equity issue in 2012.

Two unusual picks include Zurich-based Adecco SA and Randstad Holding NV of Amsterdam, staffing companies poised to benefit from a pickup in employment rates as the European economy improves. “A lot of it is in anticipation of hiring coming back,” he said.

The top performer in the screen was the Mackenzie Cundill International Class A, which posted an annualized return of 36.6 per cent in the period. But that fund will soon merge with the Mackenzie International Growth Class fund, and the strategy will be changing to try to broaden the fund’s sector exposure and create a portfolio of less concentrated investments.

Mackenzie said it expects this will fuel greater diversification and lower volatility in the fund.

Follow on Twitter: @j2nelson

 

International equity funds, one year to June 30

Fund 1-yr
% rtn
(June 30)
3-yr
% rtn
(June 30)
5-yr
% rtn
(June 30)
Mackenzie Cundill Intl Cl-A 36.6% 3.8% 0.1%
United Int'l Equity Gwth Pool-W 34.4% 15.1% 2.8%
Black Creek International Equity A 29.9% 13.6%
Templeton EAFE Developed Mkts-F 28.5% 7.3% -0.5%
Counsel International Value A 26.9% 6.5%
Integra International Equity 26.5% 11.2% -0.5%
Sun Life MFS MB Int'l Value A 24.7%
RBC International Equity 24.6% 9.8% -1.3%
Vanguard MSCI EAFE Indx ETF CAD Hdg 24.5%
BMO International Equity Index ETF 24.2% 8.1%

*Excludes other management fees. Source: Lipper

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