Travel the World With These Topnotch Funds

Going global is back in vogue. After bleeding assets during the first two months of 2011, international stock funds saw net inflows of $6.7 billion dollars in March and then another $7.1 billion in April, according to the latest fund flows report.

Although the diversified emerging-markets and world-allocation categories have garnered the largest amount of new assets, investors also appeared to be warming up to the world-stock category, which houses funds that have few geographical limitations. Although funds in the category have seen roughly $11 billion in outflows during the past year, the group has recently seen modest inflows.

Such funds can make worthy linchpins in investor portfolios. Against an uncertain economic environment, geographic flexibility holds great appeal. Moreover, given that multinationals often derive a large share of their revenues overseas, seeking investments via country of domicile has become an increasingly irrelevant consideration in portfolio construction. To that end, unconstrained global investing has become a sought-after way of dipping into a variety of areas of the market. This strategy allows managers to invest globally, and many such managers also hold stocks of any size or sector without adhering to a specific benchmark. They also have the flexibility to put money to work where they see value and build portfolios with meaningful diversification.

Using the  Premium Fund Screener, we homed in on worthy options within the world-stock category. We then filtered for noninstitutional funds that were open to new investor dollars. On the fees front, we eliminated load funds that sport expenses greater than the category average. We further narrowed our universe by focusing on funds with managers who have helmed the fund for at least five years. Finally, we layered on a screen for funds with available Analyst Reports and Morningstar Ratings of 4 or 5 stars. When we eliminated multiple share classes of the same fund, the screener yielded six offerings. Below, we've highlighted three of those.  Click here to replicate this screen.

 Harding Loevner Global Equity (HLMGX)
Veteran managers Peter Baughan, Ferrill Roll, and Alexander Walsh stick to international firms with sound business plans and sustainable advantages versus their competitors. And even though they won't shy away from loading up on atypical countries and sectors, they pay close attention to valuations, balance sheet strength, and profitability to ensure that they're not taking undue risks. The managers' penchant for high-quality companies helped mitigate losses during the recent bear market and has contributed to a stellar long-term record, as well. All in all, this offering is a topnotch option for investors seeking global blue-chip exposure.

 Oakmark Global (OAKGX)
Like all Oakmark managers, this fund's longtime skippers Clyde McGregor and Rob Taylor are bargain-hunters, focusing on stocks that trade at a significant discount to their estimates of fair value. They keep a concentrated portfolio of 40 names, but stay away from making sector or country bets. Given the concentrated nature of the portfolio, the fund is not immune to short-term volatility: During the first quarter of 2011, for example, the fund suffered as a result of its relatively high exposure to Japanese equities amid the earthquake's aftermath. With that said, sticking to bold, conviction-driven moves such as these earned the fund its excellent long-term results. Investors with higher risk tolerances and long time horizons will find this offering an attractive option for a core holding. (More conservative investors might want to pair this core offering with a growth fund to temper the potential risks).

 Tweedy, Browne Value (TWEBX)
Managers William Browne, John Spears, Tom Shrager, and Bob Wyckoff Jr. seek stocks across the market-cap range that are trading below their estimates of the firms' fair values. Holding ample cash, sticking to high-quality companies, and maintaining diversification across the market-cap range further cushions this fund against risk. And over nearly two decades, management has truly shone as skillful protectors of investors' capital, particularly during market downturns. Their long-term buy-and-hold strategy adds to the fund's appeal, especially for investors with long time horizons. Investors seeking some exposure to Asia and emerging markets should look elsewhere, as 95% of the portfolio is held in Western European or U.S. companies. But for those in search of global equity exposure with an emphasis on downside protection, this all-cap, low-risk international offering would fit comfortably.