Vanguard MSCI Emerging Markets ETF (VWO), iShares MSCI EAFE Index Fund (ETF) (EFA): The New Hot Spot for Foreign Stocks

Playing the long game

Long-term investing is the name of the game over at Harbor International (HIINX). The management team in charge here looks for financially stable companies with potential catalysts they expect will emerge in the next few years and favorably affect the firm’s competitive advantages. The fund’s low 11% annual turnover is a testament to the buy-and-hold approach that has brought it such success over the years. Harbor International has produced an annualized 10.4% return during the past decade, while the average large-cap foreign blend fund clocks in at just 7.3%. That return places the fund ahead of 95% of its peers over the past 10-year period.

High-quality blue chips are a staple of the portfolio. While the primary focus is on companies headquartered in developed nations, there’s a dash of emerging markets exposure here, as well. Consumer defensive names currently account for the fund’s largest sector weighting, and include industry leaders such as British American Tobacco PLC (ADR) (NYSEMKT:BTI), which management feels should benefit from its aggressive move into the nascent and possibly disruptive e-cigarette industry. Although Harbor International exhibits slightly more short-term volatility than many other large-cap foreign funds, patient investors should find the fund provides excellent long-term capital appreciation opportunities.

Not every investor will be enamored with actively managed investing strategies, but, if this new study is indicative of a larger trend, investors may want to consider making active management a feature in their portfolios — at least on the international side.

The article The New Hot Spot for Foreign Stocks originally appeared on Fool.com and is written by Amanda Kish.

Amanda Kish is the Fool’s resident fund advisor for the Rule Your Retirement investment newsletter. She has no position in any stocks or funds mentioned. The Motley Fool has no position in any of the stocks mentioned. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.