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According to the fund tracker Lipper Inc., the average foreign equity fund is up 10.6 percent so far this year, through March 30. Compare that with the 6.7 percent returns posted by domestic stock funds in the first three months of this year.
Foreign funds that invest in so-called emerging markets have done even better. The average Latin American stock fund, for example, is up nearly 16 percent year to date, according to Lipper. The average China fund is up nearly 20 percent. And diversified emerging markets funds, which can invest in Asia, Latin America, and eastern Europe, are up nearly 12 percent.
The continued outperformance by the foreign markets would seem to explain why Americans have become so enamored of international investing. So far this year, individual investors have poured more than $41 billion in net new money into internationally oriented portfolios, according to AMG Data Services. This compares with the $18.9 billion that has gone into U.S. equity funds.
On a relative basis, emerging markets funds appear to be even more popular, as they've pulled in more new money in the first quarter of 2006 than they did in the prior decade.
Of course, investors in U.S. stocks don't have too much to complain about. So far this year, through early trading today, the Standard & Poor's 500 index of domestic blue-chip stocks is already up 4.1 percent. That's nearly as much as the S&P 500 gained in all of 2005.
