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If the Sun Continues to Shine on Japan, These Foreign Funds Are Ready

Investors looking for diversified foreign large-cap funds that have an overweighting in the country should consider these names.

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For investors who believe that good things come to those who wait--especially those enduring the long wait for Japanese stocks to show signs of life--things have been looking pretty rosy lately. The Nikkei 225 index of large-cap Japanese stocks is up a whopping 48% so far this year and up 78% for the 12-month period ended May 21. This Japanese bull run has led to average year-to-date gains of 32% and average 12-month gains of 52% for the Japanese-stock-fund category, making it easily the best performer of any fund category tracked by Morningstar during those time periods.

For longtime observers, Japan's improving situation represents a welcome departure from more than two decades of stagnation in one of the world's largest economies. Much of the credit goes to reforms introduced by Japanese Prime Minister Shinzo Abe, including stimulus measures designed to counter crippling deflation and revitalize the country's export economy. Although there's no telling what the long-term effects of "Abenomics" will be, the near-term impact on Japanese stocks has been undeniable.

Adam Zoll has a position in the following securities mentioned above: OAKIX. Find out about Morningstar’s editorial policies.

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