Foreign Stock Funds Outperformed American In April


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Foreign stock funds outperformed U.S. stock funds in April.

The average world equity funds racked up a 2.85% gain last month, their best monthly score since January's 3.65%. It easily topped the scant 0.78% gain on average by U.S. diversified stock funds, according to Lipper Inc.

Japan-focused funds led the foreign surge, soaring 8.35%.

India regional funds tacked on 5.02% last month. Pacific regional funds grew 4.70%. European stock funds expanded 3.68%.

Part of the world-stock fund push was due to a rebound. "Some non-U.S. areas were simply catching up in April," said Bob Doll, chief equity strategist for Nuveen Asset Management. "Most lagged the U.S. in the first quarter ."

World stock funds gained 3.81% on average in Q1 vs. 10.16% for U.S. diversified stock funds.

For Japan funds, April was a continuation of Q1, when they scored a 12.75% gain.

Their huge April rise stemmed from investor approval of policy steps by Shinzo Abe, who was elected prime minister in December.

"It is optimism that they're going down a path that's kind of similar to the path the U.S. used to push down rates, push people out on the yield curve and try to stimulate growth," said Joe Milano, manager of $4 billion T. Rowe Price New America Growth Fund . "It is Japan's version of quantitative easing."

Abe appointed Haruhiko Kuroda as governor of the Bank of Japan, with a mandate to spark reflation by printing money.

Abe also has pushed for exports of Japanese infrastructure products, such as nuclear power plants to the United Arab Emirates.

European stock fund strength reflected investor comfort with how the eurozone's strong economies handled their ongoing debt crisis.

The banking blowup in Cyprus made headlines. But many investors' eyes were glued to GDP numbers.

Signs pointed to a slowdown in Germany's economy. Spain, the eurozone's fourth-largest economy, late in April reported a seventh consecutive quarter of recession.

"Investors believe the European Central Bank will do whatever it takes to support peripheral hardship economies," said Ron Sloan, chief investment officer of Invesco's U.S. core equity team and senior manager of $5.7 billion Invesco Charter Fund .

Sloan had 19% of his money at work in European stocks as of Dec. 31. He holdsABB , which makes power and utility equipment. The Swiss firm operates globally.

"We like ABB for its portfolio of businesses," he said. "They have leading shares in plant automation equipment, electronic equipment sold into a variety of nonresidential construction markets and transformers and electronic equipment sold into the utility and power generation markets. This exposure will allow ABB to participate in the necessary cap-ex spending that will occur in these markets worldwide over the next few years."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Mutual Funds

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