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Fund Spy

The Year in International Funds

A nice showing for most shareholders in 2013, but problems weren't hard to find.

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Most investors in international-stock funds are sitting on hefty gains this year. However, to maintain their comfort level, they should avoid peeking at comparable United States-focused funds. One of 2013's most noteworthy stories is that, by and large, the U.S. market had the edge. Through Dec. 19, all nine of the domestic-stock Morningstar Style Box categories (large value, small growth, etc.) boasted higher average returns for the year to date than the top foreign-stock style-box group, foreign small/mid growth.

Granted, the Morningstar Categories are not entirely equivalent: On the foreign side, we group small-cap and mid-cap funds together, while U.S.-focused small-cap funds get their own categories. With small stocks posting the strongest gains around the world this year, it's no surprise that pure small-cap categories would beat collections that combine small- and mid-cap funds. However, that alone doesn't nullify the comparisons. After all, even the mid-cap and large-cap categories on the U.S. side beat the foreign small/mid groupings.

Gregg Wolper does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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