In the early days, style wasn't an issue for foreign-stock funds. Most funds bought reasonably priced stocks of the world's largest companies. After all, international-investing pioneers such as Sir John Templeton and the managers at Scudder had profited for decades by using such strategies. In the 1990s, though, Janus and American Century met with great success when they began applying the growth-focused strategies they used at home to investing abroad. Their styles were still novel among foreign-stock investors.
The issue of investment style doesn't end with the choice between value and growth. It also involves the question of the size-otherwise known as market capitalization-of the stocks in which a fund invests. To determine an international fund's investment style, consult its Morningstar style box, which you can find on the Fund Report.
A fund's investment style will have a direct impact on its risk level. If ups and downs make you queasy, steer clear of funds that emphasize small foreign companies, because they tend to be more volatile than large-cap players. (Just like volatile emerging-markets stocks, though, foreign small-cap stocks generally do a better job of diversifying a U.S. portfolio than foreign large-cap stocks do.) And the easiest way to get exposure to both large-value and large-growth foreign stocks is through a large-blend foreign fund.
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