Third Quarter in Non-U.S. Stock Funds: Tariff Tiff Tremors

Non-U.S. equity strategies continued to lag U.S.-focused portfolios in 2018’s third quarter. Emerging markets, such as China and India, were particularly weak, while Latin America staged a comeback and Japan continued to rally.

The

The backdrop for this performance included developments that shook some overseas markets and raised serious doubts about the endurance of the period of synchronized global growth lauded early in the year. The U.S. and China’s tariff tiff led to new levies from both. That brought some high-flying Chinese stocks back to earth. For example, Chinese Internet giant

The China Syndrome The China region Morningstar Category was among the worst groups of the third quarter, falling by an average of 6.7% annualized for the quarter to date and 10.4% for the year through Sept. 27.

Negative-rated

India (Red) Ink

The India equity category was the next-worst group with a loss of 6.5% annualized in the quarter and 17% for the year, as the Indian rupee plunged to an all-time low versus the dollar. In local-currency terms, some Indian stock indexes, such as MSCI India, were actually up for the quarter and year. The only Morningstar Medalist in the group, Bronze-rated

China and India’s troubles weighed on more-diversified emerging-markets offerings. Silver-rated

A heavy emerging-markets stake took the shine off Silver-rated

Ranging the Globe World large stock was the best international category, up 3.8% for the quarter to date and nearly 4% for the year. It was a U.S. story--the best performers in the group tended to have more U.S. equity exposure.

Neutral-rated

China and Tech were among the culprits behind a couple of Bronze-rated world large-stock strategies’ bottom-quartile rankings for the quarter and year:

Latin Beat

The Latin America category, which remains among the worst groups for the year with a more than 13.5% loss through Sept. 27, rallied in the quarter, gaining nearly 3.2%. Lone Medalist

For all Morningstar Category returns through the previous day, visit the Fund Category Performance page.