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By Christine Benz | 11-12-2010 01:24 PM

Foreign Fund Winners, Losers, and Comebacks

Morningstar's Christine Benz and Karin Anderson discuss the recent performance trends for international mutual funds.

Christine Benz: Hi. I'm Christine Benz for Morningstar.com.

Although many international mutual funds were in the red at mid-year, they've made a stunning comeback recently. Here to discuss some of the trends that Morningstar's analyst team is seeing in the world of international mutual funds is Karin Anderson. She is an analyst for Morningstar.

Karin, thanks so much for being here.

Karin Anderson: Thanks for having me.

Benz: So Karin, when we look across International fund performance, you see that most fund categories are solidly in the black year-to-date, but I'm wondering if you can discuss, who the biggest winners have been and where some of the biggest losers have been?

Anderson: Well, one of the key themes for the year was the European debt crisis and what that did to Europe stocks in general. For the first half of year, they were down about 16%, with the worst of the sell-off coming in the spring. When things started to settle down a little bit, and people were perhaps less nervous that there would be sovereign defaults, performance has been bouncing back ever since. So, those stocks are up about 4% for the year-to-date.

So, Europe stocks in general have been the worst performers for the year. On the flip side of the coin some of the better performers have been small-cap stocks. Just as in 2009, they have outperformed their larger cap brethren. And so, small- and mid-cap funds have generally been up in the teens and 20% range.

And then again, like in 2009 emerging-markets stocks are beating developed-markets stocks. This is largely due to what happened with European stocks this year. But the gains haven't been quite as dramatic, but emerging-markets stocks in general are up in the 30% range.

Benz: It's nothing to sneeze at.

Anderson: Very significant.

Benz: Right, right. So, within emerging markets, people think that that category is really on fire right now, in a lot of ways it is, but you have said that even within that category, there have been some really strong performing markets and then areas that haven't performed as well. Let's dig beneath the surface there.

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