“At this moment in time, in which no-load global mutual fund would you put your IRA?” — Susan R.
The one with the best 10-year record is the Scudder Global fund. And it has done so with significantly less volatility than the average fund. Riskier, but perhaps more rewarding: Scudder Global Discovery, which buys small cap growth stocks and has actually beaten Scudder Global over the past 1, 3, and 5 years (it doesn’t have a 10-year history).
Another interesting one — I have my friend Less Antman to thank for the research on all this, along with my Morningstar disk — is the Tweedy, Browne Global Value fund. It follows a Benjamin Graham approach. (Indeed, he was a Tweedy, Browne client for years.) This fund buys the cheapest stocks in the world as measured by earnings, book value, and cash flow. Or at least that’s the general idea. As a result, it’s one of the safer stock mutual funds in existence. It’s only been around three years, but Tweedy, Browne is over 75 years old and in its third generation of family members. In their private client accounts, they’ve matched the performance of Michael Price over his entire investing life (since 1975); namely, returning around 20% per annum with about half the downside risk of the market averages. The fund has more than $1 billion under management (and, like most funds that invest abroad, a rather high expense ratio — 1.6%).
As you know, a “global fund” is different from an “international fund” in that it can include U.S. stocks as well as foreign. (We are, after all, part of the world.) If it’s strictly non-U.S. holdings you’re interested in, consider American Century’s Twentieth Century International Discovery, which invests in small non-U.S. stocks. It has a $10,000 minimum, even for IRAs (and a steep 2% expense ratio); but its bigger brother, International Growth, invests in larger non-U.S. stocks and has a $1,000 minimum for IRAs (and, again, a steep expense ratio — 1.77%).
Other excellent global funds include: Janus Worldwide (best 5-year record) and T. Rowe Price Global Stock fund (run by the same managers as T. Rowe Price International Stock fund, recent winner of Mutual Fund Magazine’s Ironman award because of its 12th consecutive year beating the average international fund). Not to mention T. Rowe Price Spectrum Growth fund, which holds about 30% foreign stocks and some natural resource stocks, making it a useful global fund for someone who wants a bias toward U.S. stocks and a hedge against the risk of inflation.
Or you could just do what everyone else seems to have done as a proxy for global investing — buy shares in Coke. Unlike global or international funds, you can buy shares in Coke (and other American-based global companies) without giving up 1.5% or 2% a year in fees. But you know what? I don’t care that Warren Buffett owns Coke or that there are a billion-plus thirsty Chinese. At Coke’s current price, I think I’d go the mutual fund route.
Quote of the Day
What's so fair about eliminating the interest deduction on your first car but not on your second home?~Murray Weidenbaum
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