Investor Alert

Global Investor Archives | Email alerts

Oct. 1, 2012, 5:16 p.m. EDT

Draghi, ECB give international stock funds a lift

Euro zone moves boost investor hopes; looking for China surprise

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Euro (EURUSD)
  • X
    Templeton Foreign Fund;R (TEFRX)

or Cancel Already have a watchlist? Log In

By Barbara Kollmeyer, MarketWatch

European Central Bank President Mario Draghi’s moves to support the euro zone’s weakest economies have cheered shareholders of international-stock mutual funds.

MADRID (MarketWatch)— If anyone can be credited with saving the third quarter and maybe the year for international-stock mutual funds, it’s European Central Bank President Mario Draghi with his pledge to “do whatever it takes to save the euro.”

Investors saw Draghi’s line in the sand as a sign that Europe’s policymakers and politicians were finally taking a hard line against the debt crisis threatening the euro zone and its common currency /zigman2/quotes/210561242/realtime/sampled EURUSD 0.0000% .

Click to Play

Pimco’s Kashkari finding global stock bargains

Neel Kashkari, Pimco's head of global equities, says slowing global economic growth points investors toward shares of industry leaders. He tells MarketWatch's Jonathan Burton about three stocks to consider now.

Of course, plenty could go wrong for international portfolios as the year winds down: an undecided bailout for Spain, Greek issues still simmering, the U.S. election and the fiscal cliff. And then there’s the unknown effects of the massive economic stimulus that has come from central banks.

Pau Morilla Giner, who overseas $3.3 billion as chief investment officer at London & Capital, said investors should brace for a renewed focus on fundamentals with most all of the central bank stimulus now in the pipeline.

“It’s going to shape up to be a tricky end of the year,” said London-based Giner. Among the complications: Draghi may have trouble implementing the ECB’s bond-buying plans, protests over austerity in Spain and Greece.

Bright-eyed buyers

Yet investors in the third quarter preferred to focus on the positive. The average international stock fund gained 6.6% in the 13 weeks through September — outpacing their U.S.-market counterparts, which rose 5.7%, according to preliminary data from investment researcher Morningstar Inc.

Europe-stock funds set the tone with a quarterly 8.1% average gain. A representative offering, ING Euro Stoxx 50 Index , rose 10.3%.

Diversified international-stock funds registered solid gains as well. Large-cap foreign-stock funds were up around 6.6% on average; peers focused on small-cap and midcap stocks, meanwhile, outdid their bigger bretheren with an average quarterly gain topping 8%. One of the quarter’s better performers was Templeton Foreign Fund /zigman2/quotes/205686735/realtime TEFRX +0.14% , up 9.1%.

Diversified emerging markets funds rose 6.7%, with Latin America funds up 5%. Among emerging-markets single-country funds, ING Russia /zigman2/quotes/201268747/realtime LETRX +1.82%  was a standout, up 10.3%, while a proxy for emerging Africa, Nile Pan Africa NAFAX 0.00%  Fund, gained 15.1%. India equity funds soared 14% as that country pushed forward with fiscal and economic reforms. But China’s economic slowdown weighed on returns from that once-hot market; China-region funds rose just 3%.

Back to 1987
for stocks?
Our Trading Deck has been home to a spirited debate over whether we're in for a crash.
L.A. Little: Don't worry | Michael Gayed: Worry
The warning signs of a 1987-style crash
Hulbert: Stocks as overvalued as at 2007 high
/conga/story/misc/investing.html 275481

Going forward, Giner suggests investors keep a healthy allocation to stocks with a global footprint that pay dividends and have a stake in the emerging markets. Read more: U.S. stock funds land in the money.

“It might be a difficult time for cyclical stocks in the last quarter of the year as macro data is bound to be worse, and looking at the specter of the fiscal cliff might scare some investors,” Giner said.

Europe calling — softly

Indeed, many fund managers are cautious about Europe, even as they try to keep a foothold.

US : Tullett Prebon
0.0000 0.0000%
Volume: 0.0000
Dec. 8, 2021 6:12p
US : U.S.: Nasdaq
$ 7.37
+0.01 +0.14%
Volume: 0.00
Dec. 8, 2021
US : U.S.: Nasdaq
$ 39.15
+0.70 +1.82%
Volume: 0.00
Dec. 7, 2021
US : U.S.: Nasdaq
$ 10.87
0.00 0.00%
March 28, 2019
1 2
This Story has 0 Comments
Be the first to comment
More News In

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.