Personal Investor: Best and worst international equity funds mid-2017
It’s been a good year - so far - for international equity funds. The average fund available on the Canadian market actually beat the benchmark MSCI Europe, Asia and Far East (EAFE) index in Canadian dollars, advancing 11.6 per cent.
International equity funds are probably the most useful asset class in the mutual fund world. They primarily invest outside the U.S. and Canada, which isn’t so easy for the average investor.
In comparison, most holdings in U.S. and Canadian funds are easy to access on North American exchanges, giving the average investor an option to ditch the high fees and invest directly.
That’s why management matters when it comes to choosing an international equity fund. These funds will often have managers or sub advisors on the ground looking for the best investments in remote areas of the world. For that reason annual fees, or management expense ratios (MER), tend to be higher.
International equity funds will also spare the investor the burden of having to hedge against currency fluctuations.
In the first half of 2017 the EAFE total return index grew 10.6 per cent in Canadian dollars.
Some international equity funds beat the index over the same time period, with the top performer - Desjardins Overseas Equity Growth fund - posting a 20.6 per cent return.
Others lagged the index. The worst performer in the first half of 2017 was the Brandes International Equity fund, which grew by four per cent.