Page 25 - ARUBA TODAY

BUSINESS Wednesday 5 July 2017
A25

Bonjour investors: Money is pouring into foreign stock funds

By STAN CHOE doned the United States
AP Business Writer - Google’s parent, Alpha-
NEW YORK (AP) — Forget bet, is its biggest holding,
an American-only 401(k). and U.S. stocks still make up
Investors are flocking to for- nearly half its portfolio. But
eign funds and snapping it’s been more likely to trim
up stocks from Europe, Asia its U.S. investments as their
and across the develop- price tags continue to rise
ing world. The lure: Foreign and use that cash instead
stocks may finally be shak- in cheaper foreign stocks,
ing out of their doldrums. such as Symrise, a German
After struggling for nearly a provider of flavors and fra-
decade and falling well be- grances. Foreign stocks
hind their U.S. counterparts, have long been cheaper
which raced to record than U.S. stocks, a result
heights, overseas stocks of their divergence in per-
have been bouncing high- formance. Stocks across
er this year on expectations China and other emerging
that economic and profit markets are trading at 12
growth are on the upswing. times their expected earn-
The most popular catego- ings per share over the next
ry of foreign stock funds 12 months, for example.
has returned an average Their U.S. counterparts are
of 14.9 percent this year, A woman walks by an electronic stock board of a securities firm in Tokyo, Friday, June 30, 2017. trading at a more expen-
through mid-June, accord- Forget an American-only 401(k). Investors are flocking to foreign funds and snapping up stocks sive price-earnings ratio
ing to Morningstar. from Europe, Asia and across the developing world. of nearly 18, according to
Funds that focus on stocks MSCI indexes.
from China and other The thought is that having stocks than its benchmark elsewhere, which means What’s different now is that
emerging markets have a portfolio filled with stocks index. Now it’s leaning those other areas may analysts are expecting
returned even more: 18.1 from different economies more heavily on stocks from have more room still left to earnings growth for emerg-
percent. Both easily top the makes it safer. When some Europe, Japan and across rise. “The banking system ing markets to be stronger
less-than-10 percent return areas of the world are the developing world. in the U.S. took its hits and than for U.S. companies,
of a Standard & Poor’s 500 struggling, others will hope- “Things are going to recapitalized, and it was said Patricia Ribeiro, port-
index fund of U.S. stocks fully be doing better and change,” said Rick painful and expensive, and folio manager at American
over the same time. smoothing out returns. For Schmidt, portfolio manager Europe didn’t do that,” Century’s Emerging Mar-
Investors have noticed and the last several years, U.S. at Harding Loevner. Schmidt said. “Now, Eu- kets fund. “That’s positive,
are jumping onboard. They stocks have been the ones The U.S. recovery is further rope is starting to.” that’s the change,” she
plugged $65 billion into to plow ahead while others along than in Europe and The fund hasn’t aban- said.q
world stock mutual funds lagged. Perhaps the flip will
and exchange-traded be true in coming years.
funds through the first four At Harding Loevner’s Glob-
months of the year, ac- al Equity fund, managers
cording to the Investment had long been favoring
Company Institute. That’s U.S. stocks. For 10 years, it
nearly triple what they owned more U.S. stocks
put into U.S. stock funds than its benchmark index
and ETFs. The shift in senti- held, and it was rewarded
ment has been so strong for it.
that investing in European The fund ranks in the top 9
and emerging markets has percent of its category for
gone from being a contrar- 10-year returns.
ian move to a consensus But last year, it began cut-
one, BlackRock’s global ting back on U.S. stocks af-
chief investment strategist ter managers thought they
Richard Turnill wrote in a re- had grown too expensive
cent report. following their strong runs.
For many investors, it’s an By the end of the year,
embrace of diversification. it was holding less in U.S.