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4 Global Equity Funds to Buy on Strong Inflows

Investors are shifting their focus to global equity funds from domestic equity funds in the aftermath of Trump's "America First" approach. According to Lipper's latest fund flow report, stock funds investing globally have registered five straight weeks of gains. In contrast, domestic equity funds registered significantly strong outflows last week.

Moreover, recently released economic data indicates that the world's major economies, including the Euro zone and China are gradually picking up pace. In this scenario, these countries provide lucrative investment propositions. Global mutual funds are excellent options for investors looking to widen exposure across countries and might be a sensible investment option.

Global Equity Funds Post Steady Inflows

As per the latest Investment Company Institute (ICI) weekly fund flow report, domestic equity-based funds have recently seen heavy outflows, whereas world equity funds continued to attract investor attention. For the week ended Feb 8, equity funds reported inflows of $1.61 billion. While domestic equity funds had outflows of around $31 million, international equity funds had inflows of $1.64 billion.

According to Lipper's weekly fund flow report for the same period, equity fund flows remained mixed last week. Total inflows in international equity funds reached $2.5 billion, registering the fifth straight week of gains. Meanwhile, domestic equity funds posted outflows of $99 million, in contrast with inflows of $12.7 billion reported a week earlier.

Why Buy Global Equity Funds?

If selected carefully, global mutual funds have the potential to offer secure and attractive investment opportunities. Different studies over the years have shown that a portfolio with both domestic and foreign securities helps in reducing risk while enhancing returns. Also, a steady decline in U.S. equity funds demand might cause investors to consider diversifying their investments throughout the globe.

Separately, China and the Euro zone have reported encouraging economic data recently.For instance, China's PPI increased to its highest level since Aug 2011 in January, registering an annual increase of 6.9%. Additionally, CPI increased 2.5% -its fastest rate in nearly two and a half years in January. (Read More: 5 China Stocks to Buy as Red Dragon Outshines Asia )

Moreover, Euro zone job additions reached the highest level in nine years last month, while unemployment hit single digits, per Eurostat. Also, the Euro zone economy expanded in the fourth quarter of 2016. Additionally, the European Commission raised its growth forecast for the broader European Union (EU). (Read More: 3 European Mutual Funds to Buy as Economy Revives )

With investors still fretting over U.S. President Donald Trump's "America First" approach, equity mutual funds with strong exposure to international markets have emerged as prudent investment options. According to Morningstar, the world stock mutual fund category posted three-month, year-to-date (YTD) and one-year returns of 7.7%, 5.5% and 24.5%, respectively.

Buy These 4 Global Equity Funds

This encouraging backdrop calls for investors' attention to four global equity mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have impressive year-to-date (YTD) and one-year annualized returns. They also have minimum initial investment within $5000 and low expense ratios.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

Oakmark Global Select IOAKWX invests in common stocks of companies from minimum three countries. OAKWX is believed to maintain a portfolio of around 20 securities. Under normal circumstances, the fund invests not less than 40% of its assets in securities of foreign companies. It seeks growth of capital for the long run.

OAKWX has an annual expense ratio of 1.15%, which is below the category average of 1.27%. The fund has YTD and one-year returns of 4.3% and 33%, respectively. The fund has a Zacks Mutual Fund Rank #1.

T. Rowe Price Global StockPRGSX generally invests in both domestic and foreign-established firms. Though PRGSX focuses on acquiring common stocks of companies located in the developed nations, it may also invest in companies based in emerging economies. The fund invests a large chunk of its assets in stocks from a minimum of five countries, which may also include the U.S.

PRGSX has an annual expense ratio of 0.89%, which is below the category average of 1.27%. The fund has YTD and one-year returns of 7.8% and 35.5%, respectively. The fund has a Zacks Mutual Fund Rank #2.

Vanguard Global Equity Investor VHGEX uses bottom-up stock analysis to invest a large share of its assets in equities of companies all over the globe. It invests in both "growth" and "value" companies irrespective of their market capitalizations. The fund also diversifies its allocation across different industries.

VHGEX has an annual expense ratio of 0.51%, which is below the category average of 1.27%. The fund has YTD and one-year returns of 6.2% and 27%, respectively. The fund has a Zacks Mutual Fund Rank #2.

American Funds Capital World Growth and Income F2WGIFX seeks long-term growth of capital while providing current income. WGIFX invests primarily in common stocks of well-established companies located around the world, many of which have the potential to pay out dividends.

WGIFX has an annual expense ratio of 0.55%, which is below the category average of 1.27%. It has YTD and one-year returns of 5.1% and 23.8%, respectively. The fund has a Zacks Mutual Fund Rank #2.

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


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

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